Record quarter and raised outlook
Dell Technologies delivered a stronger-than-expected fiscal second-quarter 2027 report, posting record revenue and adjusted earnings. The company reported revenue of $47 billion, up 58% year over year and ahead of expectations of about $45 billion, according to Finbold and Yahoo News New Zealand. Adjusted earnings rose 203% to $7.04 per share, beating analyst estimates near $4.90, as reported by Finbold.
CEO Jeff Clarke said in the company's earnings release: "With AI momentum accelerating and our opportunity expanding across the portfolio, we're raising our full-year FY27 revenue outlook by $25 billion to $192 billion, up nearly 70% year over year."
The results were driven by AI demand, with AI-optimized server revenue reaching $16.4 billion, record AI orders totaling $60.9 billion, and an AI backlog expanding to $95 billion, according to Finbold. The company also said it booked a record $60.9 billion in AI server orders and exited the quarter with a record $95 billion backlog, as reported by Yahoo News New Zealand. Dell saw growth in its traditional servers, networking, and storage businesses, and Infrastructure Solutions Group revenue climbed 89%, supported by strong growth in those segments.
Dell has seen orders balloon as enterprise customers adopt artificial intelligence and use AI servers locally to run agentic AI queries, Yahoo News New Zealand reported.
Market reaction
Shares of Dell shot up more than 13% shortly after the open on Wednesday after the earnings release Tuesday night, according to CNBC. The stock then gave up much of those gains, up around 5% in late morning trading. In after-hours trading on Tuesday, Dell stock had surged as much as 10%, Yahoo News New Zealand reported, while Finbold reported shares rose about 9% in extended trading after closing at $425.
Dell stock is up more than 230% year to date, Yahoo News New Zealand reported. Peer Hewlett Packard Enterprise (HPE), which moved up 110% since the start of the year, also jumped in after-hours trading.
The price action comes amid recent turbulence in the AI trade. CNBC noted that last week Nvidia jumped almost 9% on strong quarterly results and an even better long-term outlook, only to give back most of the advance in subsequent sessions. CNBC's Jim Cramer said Wednesday on CNBC that the Dell quarter was "extraordinary," saying the current numbers were stronger than he thought the company would deliver a couple of years from now. He added that Dell's results also backed up the big takeaway from Nvidia's earnings that companies involved in AI are making money now.
Analysts raise targets
Following the quarter, analysts responded swiftly, with all 14 firms tracked by AIStockSavvy raising their price targets, according to Finbold. The average analyst target now stands at $584, implying about 37% upside from Dell's closing price of $425. Melius issued the most bullish target at $735, while Bernstein, JPMorgan, and Raymond James raised their forecasts to $650, $635, and $617, respectively. Barclays, Mizuho, BofA Securities, and Citi also lifted their targets to $600 or higher.
At the current stock price, Dell trades at roughly 17 times its updated fiscal 2027 earnings guidance, a multiple that appears reasonable given the company's triple-digit earnings growth and expanding AI business, Finbold noted.
Risks and outlook
Despite the strong results, supply constraints, particularly for high-bandwidth memory and DRAM, continue to limit shipments, Finbold reported. AI servers also carry lower margins than traditional hardware, potentially weighing on profitability.
The upgraded outlook reinforces expectations that enterprise and hyperscale spending on AI infrastructure will remain strong despite concerns about a potential slowdown in data center investments, Finbold noted. Dell raised its fiscal 2027 outlook, projecting $192 billion in revenue, up about 69%, and non-GAAP EPS of $25.50, representing roughly 148% annual growth.