Surges over 13% after hours! Dell(DELL.US)AI server demand soars, and the earnings guidance far exceeds expectations, igniting the market

Dow Jones Newswires has learned that thanks to strong market demand for its artificial intelligence (AI) servers, Dell Technologies (DELL.US) issued a financial outlook far exceeding Wall Street expectations, causing its stock price to surge more than 13% in after-hours trading.

The company’s statement on Thursday showed that Dell expects AI server revenue to reach approximately $50 billion in the current fiscal year ending January 2027 (FY2027), a 103% increase year-over-year. Chief Operating Officer Jeff Clarke said, “The opportunities brought by AI are reshaping our company.” He revealed that at the start of the new fiscal year, Dell had a “record backlog of $43 billion, which strongly demonstrates our engineering leadership and differentiated AI solutions are winning market share.”

Based on robust AI demand, Dell provided an optimistic overall forecast for FY2027: expected full-year revenue between $138 billion and $142 billion, well above analyst estimates of $125.54 billion; adjusted earnings per share (EPS) of $12.90, also higher than the expected $11.59. Meanwhile, the company announced a 20% increase in cash dividends and an additional $10 billion share repurchase authorization.

The latest fourth-quarter earnings report already demonstrated the strong momentum of its AI business. The report showed that Dell’s total revenue for the quarter grew 39% year-over-year to a record $33.4 billion, surpassing market expectations of $31.73 billion. Adjusted EPS was $3.89, also above the forecast of $3.53. Notably, Infrastructure Solutions Group (ISG), which includes servers, storage, and software, saw revenue soar 73% to $19.6 billion. The Client Solutions Group (CSG), covering personal computers (PCs), grew 14% to $13.49 billion.

Dell stated that its AI server customer base has exceeded 4,000, including Elon Musk’s AI startup xAI and CoreWeave (CRWV.US). Currently, major tech companies such as Google (GOOGL.US), Microsoft (MSFT.US), Amazon (AMZN.US), and Meta (META.US) are planning large-scale investments in AI infrastructure, providing ongoing growth momentum for Dell and competitors like Supermicro.

However, despite rapid growth in AI server business, the surge in storage chip prices has also impacted profit margins across different divisions. The report showed that operating profit margins for servers and networking in the fourth quarter were 14.8%, above the expected 12.9%; however, the operating margin for the PC business was 4.7%, below the analyst forecast of 6.18%.

Clarke noted in the statement, “Looking across the industry, the current market environment is filled with high uncertainty, with unprecedented AI demand causing ongoing supply shortages and frequent price adjustments.” This mainly refers to the rising costs of storage chips driven by large-scale AI infrastructure construction. On one hand, this has forced Dell, HPQ, and other manufacturers to raise product prices to pass on cost pressures; on the other hand, it may also suppress demand for consumer electronics such as PCs, smartphones, and gaming consoles globally.

Previously, HP indicated that its FY2026 performance is expected to be at the lower end of its previous forecast range. Lenovo (00992) also issued a warning, stating that pressure on PC shipments is increasing.