Dell shares surge after strong AI server demand boosts forecast

Dell Technologies stock surged about 9% in Wednesday pre-market trading after the company reported a record haul of AI server orders and had a lift in its outlook for the rest of fiscal 2027. The move will interest investors still debating if AI hardware demand can continue to grow and increase.

On the NYSE the shares transacted at 9.25% more at a price of $463.62, recovering from a 6.80% drop the day before.

Figures for Dell’s second quarter

Dell’s profit in the second quarter hit $4.133 billion, up 255% from $1.164 billion a year earlier, with earnings per share of $6.34 against $1.70. The company earned $7.04 per share on an adjusted basis, equal to $4.591 billion, compared with $2.32 a share in Q2 2025. Revenue rose 57.7% year over year to $46.971 billion.

Dell’s Infrastructure Solutions Group reported revenue of $31.78 billion, representing an 89% annual increase. The company’s AI-Optimized server business also delivered strong growth, with revenue doubling to $16.401 billion as demand for AI infrastructure continued to accelerate.

Traditional servers and networking grew 122% and storage rose by 26%. The consumer-facing Client Solutions unit, tasked with selling PCs and laptops, added 20% to reach $15.03 billion.

Record quarter for AI server backlog

Dell said its AI server unit got about $60.9 billion in orders during the quarter, and converted $16.4 billion of this amount into recognized revenue. The unit closed the period sitting on a $95 billion backlog, representing a record for the business.

CFO David Kennedy credited the company’s quarterly results to the company raising its targets. “Our advantages reinforce one another, and throughout the quarter we used these strengths to drive growth, share gains, profitability and cash generation,” Kennedy said in the earnings release.

Higher forecast for fiscal 2027

For the current third quarter, Dell guided to earnings per share of $6.10, a 168% year-over-year increase, with adjusted EPS of $6.50 and revenue of about $49.0 billion, up 81%. The outlook for the entire year saw a sharper revision, with fiscal 2027 earnings per share now projected at $24.37, representing a 181% increase and being well over the previous estimate of $17.31.

Adjusted EPS was raised to $25.50 from $17.90, and full-year revenue guidance surged to $192.0 billion from $167 billion, representing a 69% annual gain.

Dell now expects $74 billion in revenue for the year from AI-Optimized Servers, up from a prior $60.0 billion and representing growth of 200%. Separately, Dell’s board declared a quarterly dividend of $0.63 per share, with the payment scheduled for October 30 to shareholders on record as of October 20.

The results hit a market that has continued to question AI infrastructure expenditure, while wondering if it has reached a peak level. The documented backlog worth tens of billions in addition to a doubled server segment and a raised annual target gives the market bulls a concrete data point to work with instead of abstract forecasts.

Investors will now anticipate the third-quarter results from the company which is due later in the fiscal year, to see if the $95 billion backlog will convert into revenue at the pace Dell is now looking at.

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