Dell jumps as blockbuster AI demand boosts outlook, analysts see long growth runway

Dell Technologies shares surged in premarket trading on Friday after the company delivered stronger-than-expected quarterly results and sharply raised its financial outlook, reinforcing Wall Street’s growing belief that the artificial intelligence infrastructure spending boom still has significant room to run.

The server and enterprise infrastructure company, which has become a major supplier of Nvidia-powered AI systems, climbed nearly 40% before the opening bell.

The stock has climbed by almost 150% this year. At current levels, Dell was on track to add more than $81 billion (approx. ₦112.2 trillion) in market value.

The sharp rally followed a quarter that analysts described as one of the strongest performances seen in the hardware sector in years, fueled by explosive demand for AI servers, enterprise upgrades and expanding investments by hyperscale cloud providers.

AI demand drives sharp guidance increase

Dell said it now expects annual revenue between $165 billion (approx. ₦228.6 trillion) and $169 billion (approx. ₦234.2 trillion), sharply above its prior guidance range of $138 billion (approx. ₦191.2 trillion) to $142 billion (approx. ₦196.8 trillion).

The company also raised its AI server revenue forecast for fiscal 2027 to approximately $60 billion (approx. ₦83.1 trillion) from a prior estimate of $50 billion (approx. ₦69.3 trillion).

Chief Operating Officer Jeff Clarke said demand exceeded the company’s expectations across geographies and business lines as customers raced to secure computing infrastructure needed to support AI deployments.

“Demand was stronger than we anticipated across all lines of business and geographies, with customers moving decisively to secure supply across a broad range of IT needs,” Clarke said during the earnings call.

“This drove meaningful scale, record cash generation, and continued strong capital returns for shareholders,” he added.

Clarke said the stronger forecast showed that “the AI opportunity shows no signs of slowing.”

The company has benefited from aggressive data-center spending by major technology firms, including Alphabet and Amazon, alongside improved supply-chain execution and pricing gains.

Quarterly results beat expectations

Dell reported first-quarter revenue of $43.8 billion (approx. ₦60.7 trillion), up 88% from a year earlier and well above analysts’ estimates of $35.4 billion (approx. ₦49.1 trillion), according to LSEG data.

Adjusted profit came in at $4.86 per share, significantly ahead of Wall Street expectations of $2.99 per share.

The results prompted at least three brokerages to raise their price targets on the stock.

According to LSEG data, Dell currently carries a median price target of $236.5, with 19 out of 28 analysts rating the shares “Buy” or higher.

Morgan Stanley analysts described the quarter as among the most impressive they had seen while covering the hardware industry.

“This was across the board one of the most impressive quarters we've seen in our time covering Hardware, especially in the context of what is happening across the component universe,” the brokerage said in a note.

AI infrastructure supercycle gains momentum

Analysts increasingly view Dell as one of the clearest beneficiaries of the shift in AI spending toward hardware and infrastructure.

Wellington Altus strategist James Thorn said markets were still undervaluing Dell by treating it primarily as a traditional hardware manufacturer rather than a core AI infrastructure provider.

“Markets are viewing Dell as a traditional hardware company instead of an AI-enabling stock at the center of a booming compute economy,” Thorn wrote on social media platform X.

He added that Dell may still be in the early stages of what could become a prolonged AI infrastructure supercycle.

“If orders continue to lead revenue, as they are now, then we are not late in the cycle. We are still climbing the demand curve,” Thorn said.

Dell ended the quarter with a backlog of $51.3 billion (approx. ₦71.1 trillion) in AI server orders, underscoring the scale of ongoing enterprise and cloud demand.

Customers expand AI-related spending

Executives said enterprises are increasingly upgrading infrastructure, edge computing systems and PCs to support more demanding AI and agentic AI workloads.

Clarke said many customers are also trying to improve efficiency by consolidating computing space, cooling and power infrastructure.

Dell’s servers are gaining traction partly because they can deliver what the company described as a 13-to-1 consolidation ratio, helping customers reduce operational complexity while scaling AI capacity.

Chief Financial Officer David Kennedy said the transition from training AI models toward deploying and using them in enterprise settings could broaden Dell’s long-term growth opportunity beyond AI servers alone.

“That makes it a more broad-based durable growth over the long term for us,” Kennedy said in an interview with Bloomberg Television.

The strong results also lifted shares of other AI infrastructure companies.

Super Micro Computer rose more than 10%, while Hewlett Packard Enterprise gained over 23%.

Dell shares have already more than doubled this year, substantially outperforming the broader S&P 500, which has risen about 10.5% over the same period.

Despite concerns around rising memory chip prices and supply constraints, Dell said it has continued working to protect margins through tighter cost controls and improved supply-chain management.

For investors, the latest results reinforced a broader market narrative that the next phase of the AI boom may increasingly be driven not only by software models, but by the infrastructure companies powering the global expansion of compute capacity.