Dell reports fastest sales growth since 2018 as AI server demand drives 88% revenue surge

Dell shares jump 5% after server maker reports fastest sales growth since return to public market in 2018

Dell reported its fastest pace of revenue growth for any period since its return to the public market more than seven years ago, and topped analysts' estimates for sales and profit. The stock climbed 13% in extended trading on Thursday. Here's how the company did in comparison with LSEG consensus: * Earnings per share: $4.86 adjusted vs. $2.94 expected * Revenue: $43.84 billion vs. $35.43 billion expected Revenue soared nearly 88% from a year earlier in the quarter, which ended on May 1, according to a statement. Since its IPO in 2018, which came five years after the server maker was taken private, year-over-year growth has never exceeded 39%, a mark that was hit in the January period. The expansion is being driven by artificial intelligence, with Dell assembling servers containing graphics processing units from the likes of Nvidia. Dell said it AI server revenue increased 757% from a year earlier to $16.1 billion. For the full year, Dell now expects AI revenue of $60 billion, up from a projection of $50 billion in February. That would reflect 144% growth. As of Thursday's close, Dell's stock was up more than 150% for the year, compared to the S&P 500's roughly 10% gain. One big winner in the Dell pop is President Donald Trump, who became a shareholder in the first quarter, according to U.S. government ethics filings. At a White House event earlier this month, Trump said, "Go out and buy a Dell." On Wednesday the Pentagon announced a five-year contract with Dell worth $9.7 billion for Microsoft 365 productivity services. That comes roughly five months after Dell CEO Michael Dell and his wife, Susan Dell, donated $6.25 billion to fund Trump Accounts for 25 million U.S. children. Dell said net income in the latest quarter more than tripled to $3.44 billion, or $5.24 per share, from $965 million, or $1.37 per share, a year earlier. In January, Dell raised prices to reflect higher input costs tied to the global memory shortage from the AI boom. For the fiscal second quarter, Dell is targeting $4.80 in adjusted earnings per share on between $44 billion and $45 billion in revenue. Analysts polled by LSEG were looking for $2.98 per share in earnings and $34.97 billion in revenue. Dell upped its forecast for the 2027 fiscal year, and now sees $17.90 in adjusted earnings per share, with between $165 billion and $169 billion in revenue, implying 47% growth at the middle of the range. Analysts surveyed by LSEG had anticipated $13.09 per share, on $142.5 billion in revenue. Revenue from Dell's Infrastructure Solutions Group, featuring servers and other data center equipment rose 181% to $29 billion, well above StreetAccount's $22.4 billion consensus. Growth accelerated across AI servers and traditional servers and networking gear. The Client Solutions Group, which includes consumer and business PCs and accessories, recorded a 17% increase in revenue to $14.6 billion, above the $12.8 billion StreetAccount consensus. During the quarter, Dell announced new laptops and workstations for business clients. Executives will discuss the results with analysts on a conference starting at 4:30 p.m. ET.

AI server demand drives rampant revenue growth for Dell and its stock soars

AI server demand drives rampant revenue growth for Dell and its stock soars Dell Technologies Inc. delivered its fastest rate of revenue growth since returning to the public markets more than seven years ago as it delivered stellar first-quarter financial results that crushed analysts' expectations. The computer server and infrastructure marker also reported rising profitability, and its stock climbed by an impressive 38% in extended trading today. The results came as NetApp Inc., another key data center infrastructure player, also delivered strong results, sending its stock higher in late trading too. However it was Dell that earned the lion's share of the plaudits today. The company delivered earnings before certain costs such as stock compensation of $4.86 per share on revenue of $43.84 billion, up by a staggering 88% from the same period one year ago. That's a truly astonishing leap for such an established company, and it crushed Wall Street's targets. Analysts were looking for earnings of just $2.94 per share on much lower sales of just $35.43 billion. Dell delivered an even more impressive jump in its bottom line. It reported net income of $3.44 billion at the end of the quarter, up 256% from a year earlier, when it delivered a profit of just $965 million. AI servers fly off the shelves Since reentering the public markets in late 2018, five years after Dell had taken itself private, the server maker had never managed to exceed more than 39% growth in any quarter. But this time things are different, and it's all thanks to the artificial intelligence boom. Dell has emerged as one of the main beneficiaries of AI's astonishing growth because it's increasingly being seen as the company to go to in order to acquire graphics processing units from Nvidia Corp. The company assembles and sells a range of AI servers for use in large data centers, and they're really selling like hot cakes. During the quarter, Dell's AI server revenue increased by an incredible 757% from a year earlier to $16.1 billion. For the full year, the company now anticipates AI server revenue to top $60 billion, up from a projection of just $50 billion three months earlier. If it achieves that number, that would mean 144% growth year-on-year. Dell ended the quarter with more than 5,000 AI server customers, including multiple neocloud providers, sovereign clients and large enterprises, it said. With today's gains in late trading, Dell's stock is now up more than 150% in the year to date, versus gains of just 10% for the broader S&P 500 index. One of the biggest winners among Dell's backers is U.S. President Donald Trump, who became a shareholder of the company during the first quarter, according to documents filed by the U.S. Office of Government Ethics. Trump said at a White House event earlier this month that it's a good time to "go out and buy Dell," and he was prepared to put his money where his mouth is. Rising costs The company's growing profitability likely reflects a decision by Dell to raise prices for its AI servers in January. At the time, the company said it was doing this to reflect higher expenses arising from the global memory shortage that's tied to the AI boom. On a conference call with analysts, Dell's vice chairman and operating chief Jeff Clarke (pictured) said that the company is repricing its servers on an almost daily basis to reflect the surging costs of memory. "I'm sure customers feel that pain," he told analysts. "Unfortunately, I don't see that changing given the world that we're living in today, where you have an inflationary environment, whether it's fuel, whether it's raw materials, whether that's DRAM, whether that's NAND, CPUs." "We are living in an inflationary environment that is changing at a rate that obviously we've never seen before," he added. "And everything that we see suggests that continues." While it may be tough for some customers, Dell does not seem to be experiencing much hardship as a result. For the second quarter, the company said it's targeting adjusted earnings of $4.80 per share on sales of between $44 billion and $45 billion. That compares to Wall Street's target of just $2.98 per share on sales of $34.97 billion. The company also revised its full year forecast, and it now sees earnings of around $17.90 at the midpoint of its guidance range, with sales at between $165 billion and $169 billion, which would imply growth of 47% at the midpoint. Analysts are calling for earnings of just $13.09 per share on full-year sales of just $142.5 billion. The bulk of Dell's sales came within its Infrastructure Solutions group, which accounts for servers and other data center hardware. Revenue there rose 181% from a year earlier to $29 billion, well ahead of the $22.4 billion consensus estimate. It also saw a significant jump in overall unit sales, according to Clarke. "Think semiconductor companies, big tech, that are using it to actually drive some of the inference workloads and agentic workloads inside their environment," he added, discussing who the company's main customers are. Meanwhile, Dell's Client Solutions group, which accounts for personal computers and accessories, delivered revenue of $14.6 billion in the quarter, up 17% from a year earlier. Clarke said he does see some problems for the company in the second half of the year as a result of its growing supply chain challenges. In addition to memory, the company is also struggling to procure enough standard central processing units, hard drives and other components. Storage is red-hot too While it couldn't match the impressive numbers delivered by Dell, the data storage company NetApp showed that it's not only AI server makers who are seeing strong demand right now. Storage is a vital component of every AI server that's shipped, and that has helped to fuel a recent rally that has seen NetApp's stock rise more than 30% in recent weeks. The company reported solid fourth-quarter earnings of $2.43 per share on revenue of $1.95 billion, up 12% from a year earlier. The results were better than expected, with Wall Street looking for earnings of just $2.27 per share on $1.87 billion in revenue. The stock gained more than 13% in late trading. "Our industry-leading hybrid cloud, intelligent data infrastructure platform, trusted by the world's leading organizations, is powering customers' AI driven transformations," said NetApp Chief Executive George Kurian. NetApp also proclaimed confident guidance, saying it's looking for sales of around $1.83 billion in the current quarter, well ahead of the Street's target of $1.67 billion. Earnings are expected to come to $2.10 per share, compared with expectations for $1.84. The company's full-year forecast is optimistic too. It's looking for total sales of $7.45 billion by the end of the year, compared to Wall Street's prior estimate of $7.2 billion.

Dell Shares Soar 39 Percent In Wake Of $60B Raised Outlook For AI Server Sales

"I don't think applying historical markets or historical views about the market and how it is going to act are appropriate today," said Dell Vice Chairman and COO Jeff Clarke. Dell Technologies blew away Wall Street AI-optimized server revenue expectations Thursday, raising its fiscal 2027 full year outlook for that segment by $10 billion to a whopping $60 billion. The projected 2.4 times increase in AI-optimized server revenue for the fiscal year helped drive a 39 percent increase in Dell shares to $439.80 in after-hours trading. That translates into an $80 billion increase in Dell's market capitalization to about $290 billion. Dell booked $24.4 billion in AI-optimized server revenue in its first fiscal quarter ended May 1, delivering $16.1 billion in AI server revenue, up 757 percent from the year-ago period. Dell exited the quarter with a whopping $51.3 billion in AI backlog. Dell Vice Chairman and Chief Operating Officer Jeff Clarke said "historical" norms do not apply to the current AI demand environment with supply constraints, customers looking to upgrade aging infrastructure and new demand including agentic AI market growth. "I don't think applying historical markets or historical views about the market and how it is going to act are appropriate today," said Clarke. "We're finding new uses...What is the value of adding intelligence into every workflow, every decision, every product, every customer interaction. I would assert the value is pretty darn high!" Clarke said there is, in fact, "new demand" being driven by agentic AI that was unexpected as recently as last October. "There's an AI drag," he said. "There is inference. Agentic AI is driving a new marketplace for traditional servers that we haven't seen before!" Dell's traditional server sales, in fact, were up 92 percent in the quarter. Traditional servers are increasingly taking on AI workloads, said Clarke. "Those AI workloads we're seeing with very dense servers making their way into neoclouds, into some of the more advanced enterprise users, semiconductor companies and big tech, that are using it to actually drive some of the inference workloads, agentic workloads in their environment," he said. Clarke said the agentic AI market has taken off since Dell laid out its financial forecast at last October's securities analyst meeting. "The game changer since that October time is what has happened in agentic," he said. "What you are seeing is new categories of TAM (Total Addressable Market) expanding." The agentic revolution is "a completely new marketplace that is being driven by putting intelligence into every workflow and every part of knowledge work on the planet today and we are just beginning," said Clarke. Clarke said Dell is taking share in all of its segments including AI servers, traditional servers, storage and PCs. "We are winning," exclaimed Clarke. "During these times of supply disruption and a lot of puts and takes in the marketplace, customers tend to come to Dell to look for a calming hand," he said. Clarke said the "forward-looking pipeline" for Dell products has "never been healthier," said Clarke. "They are actually growing at greater than historical rates, which gave us confidence to raise the guide by $27 billion in revenue for the year," he said. C.R. Howdyshell, CEO of Independence, Ohio-based Advizex, a Myriad360 company, said the combined Advizex-Myriad360 Dell sales pipeline has doubled over the course of this year in the midst of the memory shortage and supply chain crisis. Howdyshell said he expects the combined Advizex-Myriad360 Dell sales to be up more than 50 percent this year. "We are seeing significant Dell AI server traction among enterprise customers," he said. Howdyshell credited Dell Senior Vice President of North America Channel Sales Gregg Ambulos, a 29-year Dell-EMC channel sales veteran, for driving a Dell channel renaissance in North America along with support from the Dell executive team including Dell Global Sales President Pete Trizzino. "We are working on some significant deals where customers in years past may have gone direct but Dell is standing by us," said Howdyshell. "Dell's channel commitment has never been stronger. What Gregg Ambulos has done at Dell to support the channel is unprecedented. That is going to drive significant returns for both Dell and the channel in the current supply demand environment." Howdyshell said Advizex-Myriad360 is benefiting from its top-tier Titanium status with Dell in the midst of the current supply chain crisis. "Dell is supporting the channel with AI go to market and server supply at a time when other OEMs are struggling with supply," said Howdyshell. "Dell has made a commitment to go hand-in-hand with partners into the enterprise with AI servers. That has made a huge difference." Overall, Dell reported record non-GAAP diluted earnings per share of $4.86, up 214 percent from the year-ago period, on sales of $43.8 billion, up 88 percent from the year-ago period. The Dell earnings per share results were 60 percent above the Zacks Investment consensus estimate of $3.04 per share, while Dell sales in the quarter were 23 percent above the Zacks revenue consensus of $35.46 billion. "Demand was stronger than we anticipated across all lines of business and geographies with customers moving decisively to secure supply across a broad range of IT needs," said Clarke. Looking into the second half of the year, Clarke said Dell continues to be supply constrained, which is resulting in "longer-term" multiyear conversations of three, four and five years with customers on how they "secure supply to provide their growth and upgrade" their infrastructure. "It really is access to supply because quite honestly I can't tell them what the price is going to be," he said. "But it is arrangements and agreements we are working with large customers to ensure they have what they need to grow their businesses." Clarke said the Dell sales pipeline indicates the supply constraints will continue, which is "breaking the historical norms of pipeline build within the quarter and the out quarters." The pipeline for traditional servers, for example, grew in the first quarter and also several quarters out, said Clarke. "It is showing more customers looking to get access to the technology," he said. "We are seeing budgets grow. We are seeing budgets shift...The demand that we see continues to be robust and we and the supply chain have to go find more parts for the businesses and for our customers to fulfill that demand."

Dell smashes expectations and silences the skeptics

Is the AI tidal wave, which is driving unprecedented commercial and financial euphoria for IT hardware manufacturers, reflected in Dell's quarterly results released yesterday? Absolutely, and by no small margin: compared with Q1 last year, revenue soared 88% and operating profit skyrocketed 214%. Once a marginal segment, sales of AI-optimized servers have increased eightfold, becoming the group's primary revenue driver within a single year. The so-called "traditional" server segment is performing just as well, doubling its revenue over twelve months. Is this trend sustainable? Still perplexed, investors valued Dell at quite conventional multiples at the same time last year. This lasted until the beginning of 2026, which saw its market capitalization triple. A generous donor to the incumbent president, Dell and its eponymous CEO have had the singular privilege - depending on the angle from which one chooses to observe the situation - of counting Donald Trump amongst the sell-side analysts covering the group. Donald Trump indeed bought several million dollars worth of Dell shares for his own account before recommending that the public do the same (two months later) - a first in the United States. Yesterday, Dell incidentally announced a contract worth nearly $10bn with the Pentagon. In an earnings commentary that we published last summer, we highlighted that Dell was counting on AI and the potential role of "grand orchestrator" that naturally suits it to break away from a painful period of business stagnation. The bet has paid off, at least for now: Dell has returned to growth and achieved the highest margins in its history - records it had previously approached just before the subprime crisis, which everyone will interpret in their own way. The group was able to return $8bn to its shareholders last year, primarily through share buybacks; the fiscal year now beginning promises to be of a similar magnitude. With its valuation now also at historical highs, Dell must maintain this commercial trajectory if it hopes to create sustainable value for its shareholders.