Dell Technologies (DELL) delivered a fiscal first-quarter report that stunned Wall Street, sending its shares soaring as much as 38% in extended trading. The Round Rock, Texas-based company posted revenue of $43.8 billion, an 88% surge from a year earlier, while adjusted earnings per share more than tripled to $4.86. The explosive performance was anchored by an artificial intelligence server business that saw revenue skyrocket 757% to $16.1 billion, underscoring Dell’s rapid transformation from a legacy PC maker into a central player in the global AI infrastructure buildout.
Chief Operating Officer Jeff Clarke summed up the quarter bluntly on the earnings call: “We are winning.” He emphasized that the company is gaining market share across all four of its major business lines—AI servers, traditional servers, storage, and PCs. The numbers back up that assertion, with each segment posting gains that exceeded analyst expectations and, in some cases, defied industry-wide trends.
The AI server segment was the undisputed engine of growth. Dell booked $24.4 billion in new AI orders during the quarter, pushing its backlog to a record $51.3 billion. The customer base for AI servers has expanded to more than 5,000 organizations, ranging from emerging cloud providers—often called NeoClouds—to sovereign entities and large enterprises. Clarke noted that the pipeline of future business remains multiple times larger than the current backlog, even after converting $24.4 billion into orders in a single quarter.
Fueled by that momentum, management raised its full-year outlook for AI server revenue to roughly $60 billion, a sharp increase from the prior forecast of $50 billion. The total revenue forecast for fiscal 2027 was lifted to a range of $165 billion to $169 billion, representing a midpoint increase of roughly $27 billion compared with the company’s previous guidance. Adjusted earnings per share for the full year are now expected to reach $17.90, up from $12.90.
“The AI opportunity shows no signs of slowing,” Clarke said.
Beyond the AI boom, Dell’s traditional businesses showed surprising strength. Revenue from conventional servers and networking equipment jumped 92% to $8.5 billion. Clarke attributed part of that gain to a new phenomenon: the rise of agentic AI. As artificial intelligence moves from a “consultant” role—merely providing recommendations—to an “operator” role that executes tasks, it requires a massive amount of supporting infrastructure. Every decision an AI agent makes, every input-output operation and state-management task, runs on central processing units. That CPU-based “harness” around the graphics processing unit, or GPU, workload is creating an entirely new market for traditional servers.
“I didn’t know this in October,” Clarke admitted. “This is a brand-new market. I can’t tell you how big it is today. I can only tell you it’s bigger, it’s growing, and we’re in the very, very early stages.”
Chief Financial Officer David Kennedy reinforced the point, arguing that historical models are no longer adequate to forecast demand. “What is the value of injecting intelligence into every workflow, every decision, every product, every customer interaction? I think it’s very high,” he said.
Storage revenue climbed 8% to $4.3 billion, driven by demand for Dell’s own intellectual property-based products such as PowerMax and PowerStore. The company’s non-structured storage portfolio, which is critical for feeding data to AI models, hit a record level of demand. The Client Solutions Group, which encompasses commercial and consumer PCs, grew revenue 17% to $14.6 billion. Commercial PC sales rose 18%, marking the seventh consecutive quarter of growth, as corporations continue to refresh aging hardware. Clarke estimated that roughly one-third of the installed PC base is four years old or older, and the transition to Windows 11 is accelerating replacement cycles.
Dell’s operating expense ratio fell to 8.4%, the lowest level in more than two decades, as the enormous revenue base spread fixed costs across a much larger volume. Operating income surged 154% to $4.2 billion, and net income more than tripled to $3.44 billion, or $5.24 per diluted share. The company generated $4.1 billion in cash from operations and returned $2.1 billion to shareholders through buybacks and dividends.
The quarter was not without its challenges. Clarke and Kennedy both stressed that supply, not demand, is the primary constraint on further growth. The critical bottlenecks are DRAM and NAND memory, followed by microprocessors and hard-disk drives. Clarke said the company is “re-pricing every day” to reflect the inflationary environment for components, and large customers are increasingly signing multi-year procurement agreements lasting three to five years to lock in supply. The tightness is expected to persist through the end of the fiscal year, meaning Dell will likely carry a substantial backlog into 2028.
“We have a supply problem. This is not a demand problem,” Clarke said.
For the current second quarter, Dell projected revenue of $44 billion to $45 billion and adjusted earnings of $4.80 per share at the midpoint. Both figures tower over consensus estimates, which had called for roughly $35 billion in sales and $2.99 in adjusted earnings per share.
The results mark the fastest revenue growth for Dell since it returned to the public market in 2018. The prior record was a 39% increase. Year-to-date, the stock has surged more than 150%, dwarfing the S&P 500’s roughly 10% gain.
Dell’s deepening partnership with Nvidia (NVDA) remains central to its strategy. The two companies recently celebrated the two-year anniversary of the “Dell AI Factory” concept, which bundles GPUs, networking, and storage into integrated solutions that enterprises can deploy quickly. At the GTC conference, Dell unveiled new infrastructure based on Nvidia’s Vera Rubin platform and Rubin GPU architecture. It also introduced the PowerRack, a factory-integrated rack-level system that combines compute, networking, and storage.
On the earnings call, Clarke made clear that customers are no longer buying components piecemeal. “They’re buying an integrated solution that can go into production fast, run on infrastructure they control, and meet the performance, security, and data foundation requirements of their workloads,” he said.
Analysts responded with a mix of awe and probing questions about the sustainability of the demand. Melius Research analyst Ben Reitzes asked whether the blockbuster quarter reflected genuine end-user demand or excessive pull-forward of future orders. Clarke acknowledged that some customers are buying ahead to secure supply and hedge against price increases, but he argued that several structural forces are converging: an aging installed base of PCs and servers, a Windows 11 refresh cycle, market-share gains, and the entirely new layer of demand created by agentic AI workloads.
Evercore analyst Amit Daryanani pressed on the company’s conservative second-half outlook, noting that the implied revenue split is lower than historical seasonality. Clarke and Kennedy attributed the caution entirely to supply constraints, not any softening in demand. “Demand continues to outpace supply, and that demand is broad—it’s not just GPUs, it’s CPUs, traditional servers, and PCs,” Kennedy said.
Morgan Stanley analyst Erik Woodring asked how the company’s medium-term financial targets might change in light of the new reality. Kennedy declined to revise the five-year framework on the spot but offered a broader perspective. “Using historical models or historical assumptions to understand this market is no longer appropriate,” he said. “We are seeing new TAMs emerge. The three major microprocessor vendors are all talking about an expansion of the CPU market because of agentic AI.”
The quarter also highlighted Dell’s ability to win business beyond the AI server category. The company disclosed that its Dell IP storage products have now posted five consecutive quarters of above-market demand growth. PowerStore achieved its eighth straight quarter of double-digit demand increases, while PowerScale and Object Scale both recorded double-digit gains in the most recent two quarters.
On the PC side, Clarke said the company may have moved a bit early on pricing increases, which tempered demand in the consumer and small-business segments. He expects the operating margin for the Client Solutions Group to moderate to around 6% in the second quarter, down from 8% in the first quarter, as the company balances market-share ambitions with profitability.
Dell’s transformation from a PC-and-server vendor into an AI infrastructure integrator is reshaping how investors value the company. The “Dell AI Factory” branding, the expanding ecosystem of partners that now includes Google Cloud, OpenAI, SpaceX AI, ServiceNow, Palantir, and CrowdStrike, and the rapid growth in AI server backlog all point to a business that is increasingly defined by its role in the AI supply chain.
The second-quarter and full-year guidance suggests that management expects the momentum to continue. For the full year, the midpoint of the revenue range implies growth of roughly 50%. AI server revenue is expected to more than double from the prior year. Traditional server growth is forecast at more than 60%, storage in the mid-single digits, and PCs in the low double digits.
As Clarke put it in his closing remarks: “Our pipeline indicates demand is not slowing—it is accelerating—and it substantially exceeds supply.”
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