Dell's stock heads for a record-smashing gain, as the AI boom drives a big earnings beat

By Britney Nguyen

The company's AI-server revenue was up 757% in the first quarter, while profit beat expectations by the widest margin in at least five years

Dell reported fiscal 2027 first-quarter earnings on Thursday afternoon.

Demand for artificial-intelligence infrastructure is booming, and that powered Dell Technologies to a big earnings beat and its stock looks set to break records on Friday.

The company said its results also drove record cash generation, which in turn led to continued strong returns to shareholders.

"Demand was stronger than we anticipated across all lines of businesses and geographies, with customers moving decisively to secure supply across a broad range of [information technology] needs," said Chief Operating Officer Jeff Clarke, according to a FactSet transcript of the post-earnings call with analysts.

The maker of servers and personal computers reported late Thursday revenue of $43.8 billion for the April quarter, up 88% from a year ago, and far ahead of the $35.7 billion analysts tracked by FactSet had been expecting.

Adjusted earnings per share grew 214% from the previous year to $4.86, topping the FactSet consensus for $2.96. That was the widest margin for a bottom-line beat in at least five years, according to data provided by FactSet going back to February 2021.

The stock (DELL) shot up 37.1% in premarket trading on Friday, after closing Thursday with a sixth straight gain, and a fourth straight record high. It was also on track to smash the record one-day gain of 31.6% seen on March 1, 2024.

That helped boost the shares of competitor Hewlett Packard Enterprise (HPE), which reports quarterly results on Monday. The shares surged 16% into record territory ahead of Friday's open, and also toward a record one-day gain.

Dell said it booked $24.4 billion in AI orders for the latest quarter, according to COO Clarke, and saw revenue of $16.1 billion from AI servers - up 757% year over year. After the first quarter, Dell's AI backlog is now at $51.3 billion.

On that, the company raised its expectations for AI-server revenue to reach $60 billion in fiscal year 2027, "which only goes to show the AI opportunity shows no signs of slowing," Clarke said. That would represent growth of 144% from the previous year.

The company also raised its full-year revenue outlook for fiscal 2027 to $167 billion at the midpoint, which would represent growth of almost 50%.

In Dell's infrastructure solutions group, which includes servers and networking, revenue jumped 181% from the previous year to $29 billion in the first quarter.

Dell's traditional servers and networking segment saw revenue climb 92% to $8.5 billion, while storage revenue was up 8% to $4.3 billion. The company recently released its 18th generation of enterprise-level PowerEdge servers that could potentially drive a refresh cycle, as most of the company's current install base is still on its 14th-generation servers.

Demand for traditional servers is also surging as agentic AI and inference workloads rely heavily on central processing units to run.

For Dell's client solutions group, which includes commercial and consumer devices, revenue was up 17% from a year ago to $14.6 billion. Commercial-client revenue was up 18% to $13 billion, while consumer revenue rose 9% to $1.6 billion.

For the July quarter, Dell is guiding for revenue of between $44 billion and $45 billion, representing 49% growth at the midpoint. That's above the FactSet consensus of $35.1 billion. Adjusted earnings per share are expected to be up 107% to $4.80, also topping estimates for $2.99.

The company generated a record $4.1 billion in cash flow from operations during the first quarter. It returned $2.1 billion to shareholders, including $1.6 billion through share repurchases and the rest through the dividend payments.

Ahead of the report, Bank of America analyst Wamsi Mohan said demand for AI, traditional computing and personal computers looked "substantial" for the first half of 2026, and that he expects demand for AI servers to continue through the rest of the year.

Meanwhile, the U.S. Department of Defense announced a $9.7 billion, five-year agreement with Dell for software earlier this week, including for Microsoft 365 and cloud subscriptions, to support the U.S. military, CNBC reported.

-Britney Nguyen

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05-29-26 0706ET