Dell Technologies DELL shares skyrocketed more than 30% on Friday (at the time of writing) after the company delivered blockbuster quarterly results and sharply raised its long-term outlook, fueled by booming demand for AI infrastructure.
The computing giant upped its forecast for the 2027 fiscal year, and now sees $17.90 in adjusted earnings per share, with between $165 billion and $169 billion in revenue, implying 47% growth at the middle of the range, as quoted on CNBC. The updated forecast far topped the company’s prior guidance of roughly $140 billion and topped Zacks Consensus Estimate of expectations of $143.9 billion.
For the fiscal second quarter, Dell is targeting $4.80 in adjusted earnings per share on between $44 billion and $45 billion in revenue. Analysts polled by LSEG were looking for $2.98 per share in earnings and $34.97 billion in revenues, as quoted on CNBC.
AI Demand Fuels Historic Growth
Dell reported first-quarter revenue of $43.84 billion, up 88% year over year and well above the consensus estimate of $35.43 billion. Adjusted earnings came in at $4.86 per share, crushing Zacks Consensus Expectations of $3.04 per share.
The company generated $16.1 billion in AI server revenue during the quarter, representing a staggering 757% increase from a year ago. Dell also secured $24.4 billion in AI orders in a single quarter and ended the period with a massive AI server backlog of $51.3 billion.
Fastest Growth Since Returning to Public Markets
Dell said the latest quarter marked its fastest pace of revenue growth since returning to public markets more than seven years ago. Since its 2018 IPO, the company had never posted year-over-year revenue growth exceeding 39%, as mentioned in the same CNBC article.
The explosive growth has been driven by soaring demand for AI-optimized servers powered by NVIDIA graphics processing units.
For fiscal 2027, Dell now expects adjusted earnings per share of $17.90 on revenue between $165 billion and $169 billion. Zacks Consensus Estimate for earnings was pegged at $13.14 per share on revenue of $143.9 billion.
Infrastructure Business Drives Momentum
Dell’s Infrastructure Solutions Group, which includes servers and data center equipment, posted revenue growth of 181% year over year to $29 billion, easily surpassing analyst estimates of $22.4 billion, per CNBC. Management noted that demand accelerated across both AI servers and traditional networking hardware.
PC Business Also Shows Strength
Dell’s Client Solutions Group, which includes PCs and accessories, reported revenue of $14.6 billion, up 17% year over year and above Wall Street expectations of $12.8 billion. During the quarter, Dell introduced new laptops and workstations targeted at enterprise customers.
Supply Constraints and Inflationary Pressures Persist
Despite strong momentum, Dell warned that supply constraints may continue through the second half of fiscal 2027. The company cited shortages in memory chips, processors, hard drives and other components amid continued AI-related demand.
ETFs in Focus
Against this backdrop, investors can consider Dell-heavy exchange-traded funds (ETFs) such as American Customer Satisfaction ETF ACSI, Tortoise AI Infrastructure ETF TCAI and Gabelli Global Technology Leaders ETF GGTL. These ETFs appear well-positioned following Dell’s strong earnings results, with each allocating about 5% of its portfolio to Dell shares.
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This article originally published on Zacks Investment Research (zacks.com).