Dell Technologies shares surged as much as 33% on Friday after the company raised its long-term revenue outlook, powered by explosive demand for artificial intelligence (AI) servers. The rally marked one of the strongest single-day moves for the stock in over two years, underscoring investor optimism around its positioning in the AI infrastructure cycle.
The stock climbed as high as 39% in extended trading on Thursday. On Friday it was trading with gains of around 32.6% at $420.54. The sharp move came after Dell significantly upgraded its financial guidance, projecting annual revenue of up to $167 billion, far ahead of Wall Street expectations.
AI Demand Drives Record Growth
Dell reported a staggering 88% year-on-year surge in quarterly revenue for the period ended May 1, driven largely by demand for servers used in artificial intelligence workloads. This level of growth marks a record for the company since its 2018 public listing, surpassing previous highs of 39% growth recorded earlier this year.
A key driver of the surge has been Dell's expanding AI server business, which integrates graphics processing units (GPUs) from companies like NVIDIA. AI server revenue skyrocketed 757% year-on-year to $16.1 billion, reflecting unprecedented enterprise and cloud demand for AI computing capacity.
Dell now expects AI-related revenue to reach $60 billion for the full fiscal year, up from its earlier forecast of $50 billion. This represents a projected 144% annual growth rate, highlighting the scale of the AI infrastructure buildout underway globally.
Strong Backlog And Expanding Customer Base
The company said it now serves more than 5,000 AI server customers, including neocloud providers, sovereign entities, and large enterprises. It also reported an AI server order backlog of $51.3 billion, indicating strong future revenue visibility.
Revenue from the Infrastructure Solutions Group, which includes servers, storage, and networking equipment, surged 181% to $29 billion, significantly ahead of market expectations. Growth was broad-based, with both AI servers and traditional enterprise systems contributing to the upside.
Upgraded Guidance Beats Expectations
For the fiscal second quarter, Dell projected earnings of $4.80 per share on revenue between $44 billion and $45 billion, compared with analyst expectations of $2.98 per share on $34.97 billion in revenue.
The company also raised its fiscal 2027 outlook, now expecting adjusted earnings per share of $17.90 and revenue between $165 billion and $169 billion. This implies nearly 47% revenue growth at the midpoint, well above consensus estimates.
Diversification Beyond AI
Executives said the company is also benefiting from demand beyond AI infrastructure, including enterprise computing and government contracts. Notably, Dell recently secured a $9.7 billion US military contract related to Microsoft software licensing support, further diversifying its revenue base.
Chief Financial Officer David Kennedy said that as AI moves from training models to real-world deployment, it will create sustained demand across Dell's broader product ecosystem, supporting long-term, durable growth.
With AI infrastructure spending accelerating globally, Dell has emerged as one of the key beneficiaries of the ongoing technology cycle, driving renewed investor enthusiasm for the stock.
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