Dell rises due to increased demand for Nvidia-powered AI servers as it raises its projections.

      For years, Dell was primarily seen as a manufacturer of laptops and storage devices, a stable yet uninspiring enterprise in a well-established market. However, the advancement in AI has dramatically changed that narrative in just one quarter.

      The company’s stock has surged approximately 40% around the time of its recent earnings report, which showcased record results and an upgraded forecast, confirming that the demand for Nvidia-powered servers continues to grow rapidly.

      In the first quarter of its 2027 fiscal year, which concluded in late April, Dell reported record revenue of $43.8 billion, representing an 88% increase compared to the previous year, along with non-GAAP earnings per share of $4.86, more than three times the earnings from the prior year.

      This earnings figure significantly surpassed the roughly $2.93 that analysts had anticipated, marking a substantial achievement that resets expectations instead of merely fulfilling them.

      The driving force behind this growth is the Infrastructure Solutions Group, which creates the AI servers that enterprises and cloud providers are purchasing to operate large models. ISG revenue hit $29 billion, an increase of 181%, with Dell recognizing $16.1 billion in AI server revenue and securing $24.4 billion in new AI orders.

      Investors are particularly focused on the order intake outpacing revenue, as this indicates that the backlog is still expanding. Dell's backlog currently stands at $51.3 billion, a significant figure that provides insight into future demand: it reflects projects Dell has secured but has not yet fulfilled, offering the company greater visibility for the upcoming quarters in a market where most forecasts are largely speculative.

      Dell took advantage of these results to significantly revise its full-year outlook, projecting revenue between $165 billion and $169 billion for fiscal 2027 and estimating around $60 billion in AI server revenue, an increase from previous projections. Raising guidance by such substantial amounts mid-cycle signals that management believes the surge in spending is set to continue rather than peak.

      None of this would be possible without Nvidia. Dell’s AI servers primarily serve as platforms for Nvidia’s accelerators, and this quarter's results coincided with Nvidia revealing its own record data-center revenue of $75.2 billion, a 92% year-on-year increase.

      These two sets of figures represent the same demand viewed from different stages of the supply chain—the chip manufacturer and the system builder that transforms its chips into units for banks or cloud services.

      Strong performances from competitor Lenovo had already indicated that the enterprise AI cycle was more robust than anticipated, and Dell's results reinforce that conclusion. The underlying demand propelling this trend, including GPUs being deployed in European data centers and national AI campuses, is the same force that is boosting the entire hardware sector. For now, the companies supplying the essential tools of the AI expansion are those the market is rewarding, and Dell has just provided clear evidence that orders are not waning.