Dell, record quarterly thanks to AI servers. And the share price soars 40%
The company's first-quarter revenue increased 88% year-on-year to $43.84 billion, and the company has revised upward its forecast for the 2027 fiscal year
by L.Ca
Dell raises forecasts as data centre expansion for artificial intelligence boosts demand. And the stock skyrockets. Dell's stock (listed on Wall Street) soared nearly 40 per cent in after-hours trading yesterday and 30 per cent in pre-market trading this morning, not only because of higher-than-expected earnings, but also because the market is reassessing the supply chain for artificial intelligence infrastructure.
According to a press release issued by the Texas-based company on Thursday, revenue for the fiscal year ending January 2027 will be around $167 billion, $60 billion of which will come from the sale of artificial intelligence servers. This is higher than the previous revenue forecast of $140 billion and exceeds analysts' average estimate of $142.1 billion, according to data compiled by Bloomberg. In the first quarter of the fiscal year, sales rose 88% to $43.8 billion, compared to an average estimate of $35.5 billion. In addition to artificial intelligence-based products, the results were driven by demand for traditional servers with central processing units (CPUs). Sales in this division almost doubled to USD 8.5 billion in the quarter compared to the same period last year.
Dell's servers designed to run artificial intelligence workloads are attracting customers from companies that lease computing power such as CoreWeave Inc. and Nscale Global Holdings Ltd. as well as enterprise customers and major AI vendors. The company booked $24.4 billion in AI orders and generated $16.1 billion in AI server sales in the quarter ended 1 May and closed the quarter with an AI server order backlog of $51.3 billion. The hardware company also made efforts to contain costs and improve margins amid rapidly rising memory chip prices. Earnings, excluding certain items, were $4.86 per share for the quarter, compared to an average estimate of $2.99.
Following the publication of the results, the company's share price rose about 39% in after-hours trading. The stock rose to $437.70 in early trading and then closed at $317.05. If the rise holds at the opening of markets in New York, it will be the stock's biggest intraday rise in more than two years. Dell's server business is considered one of the winning sectors in artificial intelligence this year, which pushed the stock up more than 150 per cent to Thursday's close.
As customers shift their focus from training artificial intelligence models to using them, it creates opportunities for Dell's products that go beyond AI servers, Chief Financial Officer David Kennedy said in an interview with Bloomberg Television. "This," he added, "allows us to grow more broadly and sustainably over the long term.
