Dell raises AI server outlook after first-quarter revenue surge

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Dell AI server revenue surge

Highlights

Dell Technologies reports fiscal Q1 revenue of $43.84 billion and adjusted EPS of $4.86, beating analyst estimates by wide margins.
AI server revenue soars 757% year over year to $16.1 billion, prompting Dell to raise its AI-optimized server sales outlook to $60 billion by January 2027.
Dell shares jump as much as 35% after quarterly results, fueled by robust AI demand and a new $9.7 billion software deal with the U.S. military.

AI server demand drives quarterly outperformance

As reported by CNBC, Dell Technologies delivers record fiscal first-quarter results for the period ended May 1, helped by far stronger-than-expected momentum in AI-linked servers. Revenue reaches $43.84 billion, above the $35.43 billion expected by analysts polled by LSEG, while adjusted earnings come in at $4.86 per share, topping the consensus estimate of $2.94.

The company says widening adoption of AI systems gives its server unit a major boost. AI server revenue jumps 757% from a year earlier to $16.1 billion, surpassing sales from Dell’s PC business, and executives say revenue from AI-optimized servers could reach $60 billion for the full year through January 2027, up from a prior forecast of $50 billion.

Morgan Stanley analyst Erik Woodring says demand strength is unprecedented across all segments. The results challenge earlier analyst views that much of the upside from Dell’s AI exposure was already reflected in the stock price.

Share rally and defense deal add momentum

Dell shares surge as much as 35% on Friday and are recently up about 29%, putting the stock on track for its strongest day on record. The company’s top line grows nearly 88% from a year earlier, marking its biggest quarterly revenue increase since returning to the public market in late 2018.

Investor enthusiasm has already been building around the Texas-based company’s AI infrastructure push, with the stock up 225% since the start of the year. Sentiment also gets an additional lift after Dell unveils on Wednesday a roughly $9.7 billion agreement to provide a suite of software to the U.S. military.

In our earlier coverage of Dell Technologies’ post-earnings rally, we highlighted how the company’s quarterly results showcased a sharp acceleration in demand for AI servers and the fastest revenue growth pace since 2018. We also noted that strong appetite for GPU-equipped systems helped drive a major upside surprise in earnings and kept investor focus on Dell as enterprise spending shifts toward AI infrastructure.

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