Dell Technologies is forecasting continued momentum from artificial intelligence infrastructure after reporting record fiscal second-quarter results and a sharp increase in demand for its AI servers.
Revenue rose 58% year over year to $47 billion, exceeding the Wall Street consensus estimate of $44.9 billion. Adjusted earnings per share reached $7.04, nearly triple the year-earlier figure and above the $4.91 analyst forecast.
AI infrastructure leads growth
Dell’s Infrastructure Solutions Group generated $31.8 billion in revenue, an 89% increase from the same period a year earlier. Operating profit for the division climbed 225% to $4.8 billion, while its operating margin expanded by 620 basis points to 15%.
AI server revenue doubled to $16.4 billion. New orders were 3.7 times that amount, and Dell ended the quarter with a $95 billion backlog. The company also reported strong demand for traditional servers and networking, where revenue increased 122%, while storage revenue rose 26%.
Chief Operating Officer Jeff Clarke said customer spending is helping transform information technology from a cost center into a “value driver.”
Storage becomes a larger part of the AI opportunity
Dell’s storage business is also benefiting from AI workloads that require systems to manage unstructured data, databases and related applications. Storage revenue reached $4.9 billion during the quarter.
The company said its own storage intellectual property has grown faster than the overall market for six consecutive quarters. PowerStore has recorded double-digit growth for nine straight quarters, and management expects to add more than $2.5 billion in storage revenue this year. Dell described storage as a significant margin opportunity because it owns the intellectual property behind the products rather than relying solely on third-party components.
AI customer base continues to expand
Dell now has more than 6,500 AI Factory customers. About 3,300 were added over the past three quarters, compared with 3,200 customers acquired during the previous eight quarters, indicating a faster pace of adoption.
For the next quarter, Dell expects revenue to increase 81% to $49 billion. The company also raised its full-year AI server revenue guidance to $74 billion, roughly three times last year’s level.
Analysts raise targets after the results
Evercore raised its price target for Dell to $650 from $575 and maintained the stock as a top pick. Analyst Amit Daryanani cited neocloud deployments, enterprise AI adoption, supply-chain advantages and capital allocation. Evercore’s bullish scenario projects earnings per share above $40 in fiscal 2028 and a potential path to $1,000 per share.
According to the reported analyst consensus, Dell has a Moderate Buy rating based on 14 Buy recommendations and seven Hold ratings, with no Sell ratings. The average price target is $595.17, implying about 11% upside over the following 12 months.
The stock is trading at approximately 20.6 times the fiscal 2027 consensus earnings estimate of $25.88. Consensus earnings estimates rise to $28.61 for fiscal 2028 and $34.56 for fiscal 2029. Applying a 20-times multiple to the fiscal 2029 estimate would value the shares near $691, about 29% above current levels.
