Dell Technologies (DELL) shares surged roughly 22% in after-hours trading Thursday after the company raised its full-year sales and profit forecasts and unveiled a fiscal 2027 AI-server revenue target of approximately $60 billion, signaling sustained robust demand for AI hardware.
Record Quarter Driven by AI Demand
For the quarter ended May 1, Dell reported revenue of $43.84 billion, an 88% year-over-year increase that comfortably beat the $35.43 billion consensus estimate from LSEG. Adjusted earnings came in at $4.86 per share, well above the $2.94 target. The company's infrastructure solutions group posted record sales of $29.0 billion, up 181%, with revenue from AI-optimized servers skyrocketing 757%.
AI Backlog Hits New High
Dell ended the quarter with a record $51.3 billion AI backlog, as demand for AI servers continues to outpace supply. Vice Chairman and COO Jeff Clarke noted that the company booked $24.4 billion in AI orders and generated $16.1 billion from AI server revenue, adding, "No signs of slowing." The company's AI customer base expanded to over 5,000, including neocloud providers, sovereign entities, and enterprises.
Raised Guidance and Outlook
Dell lifted its fiscal 2027 revenue target to a range of $165 billion to $169 billion, up from the prior $138 billion to $142 billion range. Adjusted earnings guidance was raised to a midpoint of $17.90 per share, compared to the earlier $12.90. For the current quarter, Dell guided for revenue of $44 billion to $45 billion and adjusted earnings of about $4.80 per share.
CFO David Kennedy attributed the momentum to strong execution across supply chain, sales, and pricing, noting that operating cash flow reached $4.1 billion, with $2.1 billion returned to shareholders via buybacks and dividends.
Broader AI Infrastructure Boom
The strong results come amid a broader surge in AI infrastructure spending. Major U.S. tech companies like Alphabet and Amazon are expected to invest over $700 billion in AI infrastructure this year, benefiting suppliers such as Dell and Super Micro Computer. Dell's customer list includes CoreWeave, Honeywell, and Samsung Electronics.
Analysts at S&P Global Visible Alpha highlighted Dell's competitive advantage due to its scale, supplier relationships, and ability to prioritize demand amid memory-chip shortages. However, the company cautioned that strong AI momentum could face risks from trade disruptions, supplier issues, and competition.
PC Business Also Shows Strength
Dell's client solutions group posted a 17% revenue increase to $14.6 billion, with commercial client revenue up 18% and consumer revenue rising 9%, indicating a recovery in PC demand.
As Dell deepens its push into AI hardware beyond its core PC business, the challenge will be protecting margins as demand surges and suppliers adjust pricing in the coming quarters.
