Dell Technologies shares jumped 14% in intraday trading on Wednesday, reaching $484 apiece, following the company's exceptional second-quarter results that exceeded Wall Street expectations. The company reported record second-quarter revenue of $47 billion, representing a 58% increase that surpassed analyst estimates of $44.92 billion. This extraordinary performance was driven by booming demand for AI-optimized servers, with the company capitalizing on the surge in investments for AI applications in data centers by tech firms and hyperscalers. Revenue from Dell's Infrastructure Solutions Group, which includes storage, software and server offerings, jumped 89% to $16.4 billion, while sales from traditional servers and networking more than doubled to $10.5 billion as customers upgraded their infrastructure and demand increased for CPU-based servers handling agentic workloads.
Dell raised its annual revenue forecast to $192 billion from $167 billion, while adjusted earnings per share target was increased to $25.50 from $17.90 earlier. The company's strong performance was fueled by record AI server demand, with Dell booking a record $60.9 billion of AI orders and closing with a record $95 billion AI backlog in the quarter. As reported by LiveMint, the company now expects fiscal 2027 AI server revenue to reach $74 billion, up from $60 billion in its previous projection. Profit, excluding certain items, came in at $7.04 per share, up 203% from $2.30 reported in the same period last year. According to J.P. Morgan analysts, "The AI momentum spoke for itself," reflecting the company's successful positioning in the rapidly growing AI infrastructure market.
Dell's servers, equipped with Nvidia's chips, are sought by clients including AI cloud providers Nscale and CoreWeave to build computing clusters for training and running AI models. According to LiveMint, amid the boom in AI demand, Dell is securing contracts for machines equipped with Nvidia Corp's AI chips, as well as for traditional servers that contain central processing units (CPUs) which have regained momentum because they are useful for managing AI agents. The company's AI-optimized servers are benefiting from the broader trend of tech firms and hyperscalers ramping up investments in data centers to support large language models and other AI applications. "IT environments have shifted from cost centres to value drivers that fuel growth and competitive advantage," said Jeff Clarke, vice chairman and chief operating officer at Dell Technologies.
Shares of other AI server makers, including Super Micro Computer and Hewlett Packard Enterprise, rose 0.7% and 5.4% respectively, following Dell's results. LiveMint reports that shares of Dell Technologies have more than tripled this year, reflecting the company's strong AI momentum. Melius Research raised its price target on Dell to $735, the highest among analysts tracked by LSEG. At the current share price of $461, Dell is set to add about $23.26 billion in market value if gains hold. The company's shares were trading at 18.12 times expected earnings over the next 12 months, compared to 12.56 and 8.06 for HPE and Super Micro respectively. "That's clearest in our AI server business where we booked a record $60.9 billion in orders, recognized a record $16.4 billion in revenue and exited the quarter with a record $95 billion backlog," Clarke noted.
