Dell just posted its strongest earnings report ever. On Friday, shares soared 32%, marking the biggest one-day gain in the company’s history and the top performance in the S&P 500 that day. The computer and server maker’s first-quarter results beat analyst expectations across the board. Here’s what fueled the surge and why some analysts now see Dell as the top pick for AI exposure.
Dell reported adjusted earnings of $4.86 per share on $43.8 billion in revenue, far above the expected $2.96 per share and $35.7 billion. A year ago, the company earned $1.55 per share on $23.4 billion in revenue. This growth is remarkable.
The main reason for this surge is strong demand for AI servers. Dell brought in $16.1 billion from AI-optimized servers this quarter, up 757% from last year. The company now expects AI server revenue to reach $60 billion by fiscal 2027. For the full year 2027, Dell forecasts revenue between $165 billion and $169 billion, much higher than previous estimates and analyst expectations. For the second quarter, Dell predicts earnings of $4.80 per share at the midpoint, more than double Wall Street’s $2.99 estimate, on revenue of $44 billion to $45 billion compared to the $35.1 billion forecast.
Mizuho increased its price target for Dell to $435 from $350 and kept an Outperform rating, expecting Dell to take over 12% of the global server market by 2026. Melius Research raised its target to $565 from $380 and kept a Buy rating. One analyst at Melius said he had never seen a performance like this in his long career following Dell, calling the company possibly the best way to invest in AI right now.
The earnings report came after Thursday’s news that Dell won a five-year, roughly $9.69 billion contract with the Department of Defense to improve software acquisition for the department, the intelligence community, and the Coast Guard. Dell shares had already closed at a record high on Thursday, and then jumped another 32% after the earnings release.
