Dell Technologies (DELL) shares rallied sharply after the computer and server maker topped Wall Street’s expectations and raised its full-year outlook.
Dell reported adjusted earnings of $7.04 per share, well above Wall Street’s $4.92 estimate. Revenue reached $46.97 billion, topping expectations of $44.92 billion and rising about 58% from a year earlier. Shares surged 15% on Sep. 2 and gained another 4.9% on Sep. 3.
The company also issued guidance well above Wall Street expectations. Dell expects fiscal third-quarter adjusted earnings of $6.50 per share on revenue of $49 billion. Analysts surveyed by LSEG had expected earnings of $4.49 per share on $41.42 billion in revenue, CNBC reported.
For the full year, Dell now expects adjusted earnings of $25.50 per share and revenue of $192 billion, up from its previous revenue forecast of $165 billion to $169 billion.
Dell shares are up 309% this year through Thursday’s close, compared with a roughly 13% gain for the S&P 500.
Dell stock surged on record AI server demand
Investors have increasingly viewed Dell as a major beneficiary of spending on AI servers and data centers.
“We booked $60.9 billion of AI orders in this quarter, the most in our history. We are also seeing AI-related tailwinds in traditional servers and networking, along with early signs of increased storage demand,” said Dell’s operating chief, Jeff Clarke, on a call with analysts.
Dell’s AI-optimized server revenue reached $16.4 billion, topping the $16.07 billion consensus. Traditional server and networking revenue jumped 122% to $10.53 billion, while storage revenue increased nearly 26% to $4.85 billion.
Dell now expects $74 billion in AI-optimized server sales for the fiscal year, representing roughly 200% growth. Six months ago, the company was forecasting growth of 103%.
Dell lands major government deals
Dell’s rapid growth is also being supported by several large contracts.
During the quarter, the company secured a five-year contract worth roughly $9.7 billion to provide software and related services to the U.S. military.
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Dell Federal Systems won the contract through a competitive process. The agreement calls for Dell to provide Microsoft 365, advanced cloud subscriptions and on-premises licensing capabilities to the Defense Department.
“The vendors were all evaluated based on competition, comparison to GSA schedule pricing, and overall chain of value to the department,” acting Navy Chief Information Officer Barry Tanner said. “Going through the process of evaluation, they came out on top.”
Defense Department officials said consolidating software purchases under the agreement could save the Pentagon roughly $422 million per year.
In July, President Trump, who has bought Dell shares since returning to office last year, again promoted the company, telling a White House crowd to “Go out and buy a Dell Computer” and saying he has “a son that loves their laptop.”
Dell congratulated Trump on his election victory in 2024 and joined Trump’s Council of Advisors on Science and Technology.
Citi raises Dell stock price target to $600
Following Dell’s earnings beat, Citi analysts raised their price target on the stock to $600 from $515 and maintained a Buy rating, according to a research note sent to TheStreet.
Citi said demand across Dell’s major end markets remained strong, while better margins, pricing, product mix and operating expenses helped earnings significantly outperform expectations.
“Surging demand across key end-markets combined with strong execution drove a clear beat relative to heightened expectations,” Citi analysts wrote.
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Citi also believes Dell’s guidance still reflects supply constraints, leaving room for additional upside if component availability improves.
The analysts pointed to Dell’s growing AI business as a major driver, noting that Dell’s pipeline is several times larger than its backlog and now spans more than 6,500 customers.
“Momentum should sustain ahead, driven by infrastructure modernization and expanding enterprise AI adoption,” Citi analysts said, adding that Dell’s scale and broad product lineup are helping it gain market share.
Dell stock closed at $515.01 on Sep. 3.
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