Dell shares soar nearly 40%: the company reported its best revenue growth in 8 years

Shares of PC and AI server assembler Dell jumped 39% in extended trading on Thursday, May 28, after it reported its fastest revenue growth rate since 2018. The company's results far exceeded market expectations, with demand for AI servers in particular increasing more than eightfold. Dell raised its full-year revenue forecast but warned it would face supply constraints in the second half of the year due to a shortage of memory chips.

Dell Technologies' revenue in the first quarter of fiscal 2027, which ended May 1, rose nearly 88% year-over-year to $43.84 billion. Analysts polled by LSEG were expecting $35.43 billion, CNBC writes. Since the company's return to the stock exchange in 2018, which came five years after the delisting, Dell's annual revenue growth has never exceeded 39%, the channel notes.

Adjusted earnings per share more than tripled to $4.86 versus expectations of $2.94. The gap between the actual result and analysts' forecasts was the largest in at least five years, according to FactSet data cited by MarketWatch. The company's net income also tripled.

These results were driven by demand for artificial intelligence servers, the company said. It builds them based on Nvidia GPUs. Revenue from AI servers jumped 757% to $16.1 billion in the reporting quarter. By the end of the year, Dell expects it to reach $60 billion. In February's forecast it was only $50 billion.

Revenue for the entire division, which includes AI servers and other data center equipment, increased 181% to $29 billion. The StreetAccount consensus forecast was $22.4 billion, CNBC reported. Growth accelerated in the segments of traditional servers and network equipment.

Dell raised its forecast for the full 2027 fiscal year: it now expects adjusted EPS of $17.9 and revenue of $165 billion to $169 billion, which is also significantly higher than Wall Street estimates, according to CNBC data.

The main trades of Thursday Dell shares ended with growth of 3.8%, reaching a new record - the fourth consecutive, writes MarketWatch. And after the publication of the report quotes soared by 39%. Since the beginning of the year, the company's capitalization has added more than 150%, while the S&P 500 - about 10%.

One of the big beneficiaries of the rally in Dell shares has been US President Donald Trump, who joined the company as a shareholder in the first quarter, according to documents from the US Office of Government Ethics. At a White House event earlier this month, Trump said: "Go out and buy Dell".

For Wall Street, this rise in the stock came as a surprise: the consensus price target of the 29 analysts tracking these securities is $228.3, according to MarketWatch. That's 28% below the closing level of major trading on Ma. 28. Dell stock has 18 buy recommendations, nine tips to hold in your portfolio and two bearish ratings.

Dell's servers designed to handle AI workloads are attracting customers among companies that lease computing power, such as CoreWeave and Nscale Global Holdings, as well as enterprise customers and large AI vendors. Dell's backlog of AI server orders totaled $51.3 billion at the end of the quarter, Chief Operating Officer Jeff Clark said on a conference call with analysts after the financials were released.

But as customers shift their focus from training AI models to using them, it creates opportunities for Dell's products beyond just the AI server segment, Chief Financial Officer David Kennedy said in an interview with Bloomberg Television. "It makes long-term growth broader and more sustainable," he said.

On Wednesday, the Pentagon announced a five-year, $9.7 billion contract with Dell: the company will become the sole supplier to the Defense Department and will manage the procurement, licensing and IT support of Microsoft services for the U.S. military. The deal "will provide Dell with diversified growth beyond AI and the enterprise segment," Evercore ISI analyst Amit Daryanani wrote in a note cited by Bloomberg.

The company raised prices in January to reflect higher component costs associated with global memory shortages. Dell faces "notable constraints on raw components, particularly DRAM and NAND memory chips," Clark warned. The company expects supply constraints in the second half of fiscal 2027, he said.

This article was AI-translated and verified by a human editor