What Happened?
Shares of computer hardware and IT solutions company Dell (NYSE: DELL) jumped 9.5% in the afternoon session after it continued a rally from the previous trading session as the company posted record-breaking fiscal first-quarter results driven by surging demand for its artificial intelligence (AI) servers.
The move extends an historic rally following the company's earnings release, which showed revenue surged 88% year-over-year to a record $43.8 billion. The growth was powered by a 757% explosion in AI-optimized server sales, which reached $16.1 billion. Investors are reacting to Dell's emergence as a key player in the AI hardware market, solidified by its partnership with NVIDIA.
The company booked $24.4 billion in new AI orders and ended the quarter with a record AI server backlog of $51.3 billion. In response to the strong demand, Dell raised its full-year revenue and earnings forecast, signaling sustained momentum.
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What Is The Market Telling Us
Dell’s shares are very volatile and have had 23 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock gained 30.2% on the news that it reported a blowout Q1 FY2027 earnings report.
Notably, the stock had already risen approximately 150% year-to-date before the print. The outperformance was driven by the AI server business which generated $24.4 billion in new orders in a single quarter, leaving the company with a record $51.3 billion AI backlog.
In addition, Dell posted revenue of $43.8 billion, up 88% year-over-year, crushing the Wall Street consensus of $35.4 billion by over $8 billion. Non-GAAP EPS of $4.86 came in 66% above the $2.93 estimate. The Infrastructure Solutions Group alone generated $29 billion in revenue, up 181%, with AI-optimised server revenue of $16.1 billion representing a 757% increase year-over-year.
Management then raised the stakes on guidance: full-year FY2027 revenue was lifted to a midpoint of $167 billion, up from prior guidance of $140 billion, and the full-year AI server revenue target was reset to $60 billion, up 144% from the prior year. Q2 revenue guidance of $44 to $45 billion also significantly exceeded the prior Street estimate. COO Jeff Clarke said it plainly: "The AI opportunity shows no signs of slowing.".
Dell is up 261% since the beginning of the year, and at $461.66 per share, it has set a new 52-week high. Investors who bought $1,000 worth of Dell’s shares 5 years ago would now be looking at an investment worth $4,489.
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