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

      Dell has spent years being recognized primarily as a manufacturer of laptops and storage devices, operating in a stable but unremarkable sector. However, the recent growth in AI has changed that narrative dramatically in just one quarter.

      The company’s stock has surged approximately 40% in the lead-up to and following its latest financial results, which revealed record figures and an upgraded forecast that indicate a continued increase in demand for Nvidia-powered servers.

      For the first quarter of its fiscal year 2027, which ended in late April, Dell announced record revenues of $43.8 billion, marking an 88% increase from the previous year. Additionally, non-GAAP earnings per share were reported at $4.86, more than three times the amount from the prior year.

      This earnings figure surpassed the analysts' projected figure of around $2.93 by a significant margin, setting a new benchmark for expectations rather than simply meeting them.

      The driving force behind these results is the Infrastructure Solutions Group (ISG), the segment dedicated to producing the AI servers that enterprises and cloud service providers purchase for running extensive models. ISG reported revenue of $29 billion, a staggering 181% increase, with $16.1 billion of that attributed to AI server sales and $24.4 billion in new AI orders recorded.

      The fact that new orders are surpassing revenue is what investors are particularly focused on, as it indicates that the backlog is continuing to grow. This backlog currently totals $51.3 billion, a figure that serves as an indicator of future demand: it represents work Dell has secured but has yet to fulfill, providing the company with a unique perspective on the upcoming quarters in a market characterized by uncertain forecasts.

      Dell utilized this data to significantly raise its full-year guidance, now projecting revenues between $165 billion and $169 billion for fiscal 2027, with expectations of around $60 billion from AI server revenues, an increase from previous projections. The decision to raise guidance by tens of billions mid-cycle underscores management's belief that the current surge in spending is not nearing its peak.

      None of this growth would be possible without Nvidia. Dell’s AI servers primarily serve as platforms for Nvidia’s accelerators, and the quarterly results were released shortly after Nvidia announced record data center revenues of $75.2 billion, a 92% year-over-year increase.

      These two sets of data reflect the same demand observed from different points along the supply chain: the chip manufacturer and the system builder transforming its technology into solutions for banks or cloud services.

      Strong results from competitor Lenovo had already indicated that the enterprise AI cycle was more robust than anticipated, and Dell’s performance strengthens that assertion. The underlying demand propelling this growth—specifically the GPUs being deployed in European data centers and sovereign AI initiatives—continues to bolster the entire hardware sector. For the time being, the companies providing the essential tools for the AI boom are the ones attracting market investment, and Dell has just provided the most definitive sign yet that order inflows are not slowing down.