Dell shares surge on AI server growth forecast

Shares of Dell Technologies jumped sharply after the company projected its artificial intelligence-optimized server revenue would double by fiscal 2027 and pledged to return more cash to shareholders.

Dell stock surged 10% in extended trading and climbed as much as 12% in premarket trading on Friday, News.Az reports, citing Reuters.

The company announced a 20% increase in its cash dividend and authorized an additional $10 billion for its share repurchase program.

The upbeat outlook comes as major technology companies — including Alphabet Inc., Microsoft, Amazon and Meta Platforms — are expected to collectively spend at least $630 billion this year to expand AI infrastructure. That surge in investment is boosting demand for servers and data center equipment from suppliers such as Dell and rival Super Micro Computer.

Dell said it expects revenue from AI servers to rise 103% to roughly $50 billion in fiscal 2027. The company currently counts more than 4,000 AI server customers, including xAI, founded by Elon Musk, and cloud computing firm CoreWeave.

Chief Operating Officer Jeff Clarke said on a post-earnings call that infrastructure clients initially experienced “sticker shock” due to higher prices driven by U.S. trade regulations and surging memory chip costs. However, customers quickly recognized supply constraints and shifted toward aggressively securing components for AI servers, traditional servers, and storage expansions.

Dell raised server prices on December 10 and implemented PC price increases on January 6, Clarke noted.

The company forecast full-year revenue between $138 billion and $142 billion, surpassing analysts’ average estimate of $125.54 billion, according to LSEG data. Dell also projected annual adjusted earnings per share of $12.90, above expectations of $11.59.

For the first quarter, Dell expects revenue between $34.7 billion and $35.7 billion, exceeding estimates of $29.13 billion. Its adjusted EPS forecast of $2.90 topped projections of $2.37.

In the fourth quarter, Dell reported record revenue of $33.4 billion, beating estimates of $31.73 billion. Adjusted EPS of $3.89 also exceeded the expected $3.53.

Revenue from Dell’s Infrastructure Solutions Group, which includes storage, software, and servers, rose 73% to $19.60 billion. Sales from its Client Solutions Group, which houses its PC business, increased 14% to $13.49 billion.

While AI-driven demand is fueling growth in data center hardware, a tightening memory chip supply is expected to dampen global demand for consumer electronics such as PCs, smartphones, and gaming consoles. HP Inc. has warned that fiscal 2026 results may land at the low end of prior forecasts, while China’s Lenovo has cautioned about mounting pressure on PC shipments.

Analysts said Dell’s proactive response to rising memory costs has positioned it ahead of competitors, as reflected in its strong quarterly results and full-year guidance.

News.Az 

By Nijat Babayev