Dell surges 15% as AI server sales double to $16.4 billion

Dell Technologies shares climbed nearly 15 percent last week after the server maker's fiscal Q2 results showed revenue rising 58 percent to $46.97 billion.

"IT environments have shifted from cost centers to value drivers that fuel growth and competitive advantage, and customers are investing accordingly," Jeff Clarke, Dell's chief operating officer, said.

Adjusted EPS came in at $7.04, up 203 percent year over year and well above the $4.92 Wall Street target. AI-optimized server revenue doubled to $16.4 billion, while traditional server and networking sales jumped 122 percent to $10.53 billion. Dell booked a record $60.9 billion in AI-server orders and ended the quarter with a $95 billion backlog.

Dell raised its full-year outlook, now expecting revenue of $192 billion and adjusted EPS of $25.50, up from prior guidance of $167 billion and $17.90. The stock trades at roughly 20 times projected earnings, and the raised guidance reflects expectations that AI server demand will keep accelerating through fiscal 2027.

Metric	Actual	Consensus	Beat/Miss
Revenue	$46.97B	$44.92B	+4.6%
Adjusted EPS	$7.04	$4.92	+43.1%
AI server revenue	$16.4B	$16.07B	+2.1%

The Infrastructure Solutions Group, which sells data center hardware, delivered $31.78 billion in revenue, up 89 percent year over year. Storage revenue rose 26 percent to $4.85 billion. The Client Solutions Group, which sells PCs, grew 20 percent to $15.03 billion, slightly below the $15.08 billion consensus.

Dell forecasts AI-optimized server sales of $74 billion for fiscal 2027, representing growth of more than 200 percent. For fiscal Q3, the company guided to adjusted EPS of $6.50 on revenue of $49 billion, compared with consensus of $4.49 and $41.42 billion.

"We are seeing a growing trend of customers that require meaningful CPU compute capacity to support AI and agentic workflows, and these workloads are creating incremental demand for traditional servers," Clarke told analysts.

The results reinforce Dell's position as a primary beneficiary of the AI infrastructure buildout that has also lifted Nvidia, AMD and other hardware suppliers. Forrester Research analyst Naveeen Chhabra said enterprise AI investment is moving beyond experimentation into a broader infrastructure modernization cycle, while Constellation Research's Holger Mueller noted that AI agents require CPUs as well as GPUs, driving demand across Dell's traditional server lines.

Dell's stock has climbed more than 200 percent year to date, far outpacing the S&P 500's 11 percent gain. Investors will watch the fiscal Q3 report in early December for signs that the growth trajectory can hold.

This article is for informational purposes only and does not constitute investment advice.