Dell sees an increase in stock value due to heightened demand for Nvidia-based AI servers, prompting it to raise its forecast.

      For years, Dell was regarded primarily as a manufacturer of laptops and storage devices, representing a stable yet uninspiring sector within a mature market. However, the recent expansion in AI has transformed that narrative in just one quarter.

      The company's stock has surged by approximately 40% leading up to and following its latest earnings report, which showcased record-breaking figures and an upgraded forecast, demonstrating that the demand for Nvidia-powered servers continues to rise.

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

      This earnings figure significantly surpassed the roughly $2.93 anticipated by analysts, resulting in a performance that resets expectations rather than simply aligning with them.

      The driving force behind these results is the Infrastructure Solutions Group (ISG), the sector responsible for constructing AI servers that are being purchased by enterprises and cloud providers for deploying large models. ISG revenue reached $29 billion, an impressive increase of 181%, and within this, Dell reported $16.1 billion in AI server revenue, as well as $24.4 billion in new AI orders.

      Investors are particularly focused on the order intake exceeding revenue, as it indicates that the backlog is still expanding. This backlog currently totals $51.3 billion, providing a forward-looking perspective on demand: it reflects the work Dell has secured but has yet to fulfill, offering valuable insight into the coming quarters in a market where most forecasts are uncertain.

      Dell leveraged these results to significantly enhance its full-year outlook, projecting revenues between $165 billion and $169 billion for fiscal 2027, and estimating approximately $60 billion in AI server revenue, an increase from prior predictions. Adjusting guidance upward by tens of billions mid-cycle signals that management believes the wave of spending is still on the rise, rather than nearing its peak.

      None of this progress would be possible without Nvidia. Dell’s AI servers predominantly utilize Nvidia’s accelerators, and this report comes just days after Nvidia announced record data center revenue of $75.2 billion, a 92% increase year on year.

      The two sets of figures reflect the same demand observed from both ends of the supply chain: the chip manufacturer and the system builder converting its components into solutions suitable for banks or cloud providers.

      Strong results from competitor Lenovo had already indicated that the enterprise AI market was more robust than anticipated, and Dell’s performance further solidifies this assertion. The underlying demand fueling this growth—GPUs being utilized in European data centers and sovereign AI campuses—represents the same force driving the entire hardware sector. For the moment, the companies providing the essential components for the AI boom are the ones receiving market attention, and Dell has clearly indicated that order growth is not slowing down.