Dell Technologies surged 38% in New York premarket trading after delivering a major earnings beat and issuing a stronger-than-expected annual sales forecast, fueled by explosive demand for AI servers that continues to reshape the hardware sector.

Earnings results reinforce Dell's position as a direct beneficiary of the AI infrastructure buildout, as hyperscaler capex accelerates toward an estimated $800 billion this year and demand for compute-heavy server infrastructure remains robust.

Dell now expects fiscal 2027 revenue of $165 billion to $169 billion, far above its prior forecast of $138 billion to $142 billion and Bloomberg consensus of $142.1 billion. Adjusted earnings are now projected at $17.65 to $18.15 a share, versus the prior view of $12.65 to $13.15.

2027 Forecast:

• Sees revenue $165 billion to $169 billion, saw $138 billion to $142 billion, Bloomberg Consensus estimate of $142.12 billion

• Sees adjusted EPS $17.65 to $18.15, saw $12.65 to $13.15, estimate $13.14

• Sees AI Server revenue $60 billion

Second Quarter Forecast:

• Sees revenue $44 billion to $45 billion, estimate $35.06 billion

• Sees AI Server revenue about $15.5 billion

• Sees adjusted EPS $4.70 to $4.90, estimate $3.05

First-quarter results crushed the analyst estimates tracked by Bloomberg. Revenue soared  88% year over year to $43.8 billion, while adjusted EPS hit $4.86, compared with estimates of $2.99. AI server revenue came in at $16.1 billion, exceeding estimates, while AI server backlog rose to $51.3 billion.

First Quarter Results:

Total net revenue $43.84 billion, +88% y/y, estimate $35.52 billion

• AI server revenue $16.1 billion, estimate $13.1b
• Traditional servers and networking revenue $8.5 billion, +92%

Adjusted EPS $4.86 vs. $1.55 y/y, estimate $2.99

AI server backlog $51.3 billion, estimate $45.33 billion

Infrastructure Solutions Group net revenue $29.01 billion vs. $10.32 billion y/y, estimate $22.3 billion

• Storage revenue $4.33 billion, +8.5% y/y, estimate $4.16 billion

Client Solutions Group net revenue $14.61 billion, +17% y/y, estimate $12.93 billion

• Commercial revenue $13.02 billion, +18% y/y, estimate $11.41 billion
• Consumer revenue $1.59 billion, +8.6% y/y, estimate $1.46

Cash flow from operations of $4.1 billion

Adjusted gross margin 18.1% vs. 21.6% y/y, estimate 17.3%

Adjusted operating margin 9.7% vs. 7.1% y/y, estimate 7.82%

Adjusted operating income $4.24 billion vs. $1.67 billion y/y, estimate $2.77 billion

"Our record Q1 performance reflects strong in-quarter demand, as well as our pace of innovation across the full stack of PCs, compute and storage," said Jeff Clarke, vice chairman and chief operating officer, Dell Technologies. "We booked $24.4 billion in AI orders and recognized $16.1 billion of AI server revenue. We're increasing our AI server revenue expectations for FY27 to $60 billion, which only goes to show the AI opportunity shows no signs of slowing."

"Execution was exceptionally strong across the business – from supply chain to sales to pricing – driving record revenue of $43.8 billion, record EPS, record Q1 cash flow of $4.1 billion and continued strong shareholder returns of $2.1 billion," said David Kennedy, chief financial officer, Dell Technologies. "We entered FY27 with clear momentum, raising our full-year revenue outlook to $167 billion at the midpoint, up nearly 50% year over year."

Goldman analysts framed the earnings as "Broad-based beat drives raised FY outlook."

Analyst Katherine Murphy's first take noted, "DELL should trade higher on an earnings beat & better-than-expected FY27 guidance driven by strong AI server expectations and strength in PC profitability."

Murphy's 12-month price target is $230 based on 15.0x our NTM+1Y EPS.

UBS analyst David Vogt raised his target for the stock by a staggering 81% but kept the rating neutral.

Here's what others on Wall Street are saying (courtsey of Bloomberg):

Citi (buy, PT $290)

• "Dell reported results significantly exceeding expectations," and the outlook is positive.

Vital Knowledge

• "There's absolutely nothing to complain about w/huge upside and a big guidance hike (demand is benefiting from AI, but the non-AI parts of the business performed well too, and component price inflation didn't crimp margins)"

Bloomberg Intelligence

• "Dell's robust 1Q sales and EPS beat, along with its sharply higher outlook, was broad-based and suggests sustained demand strength"

• "Even as demand pull-forward drove 1Q results, the magnitude of the guidance increase suggests strength in both AI and traditional servers will continue in coming quarters"

Shares of Dell topped $440 in premarket trading and were up nearly 40%. The trend has gone absolutely parabolic over the past year.

We asked earlier this week: "Will $800 Billion in AI Capex Spending Boost US GDP?"