Dell Stock Surges 33% on Record AI Server Revenue, May 30

Dell Technologies delivered fiscal Q1 2027 results that shattered analyst expectations on May 28, sending shares up 33% in trading. Revenue hit a record $43.8 billion, up 88% year-over-year, while adjusted earnings per share jumped 214% to $4.86. AI server revenue surged 757% to $16.1 billion, signaling explosive demand for artificial intelligence infrastructure. The company raised full-year guidance to $165-169 billion and now expects $60 billion in annual AI server revenue.

Why AI Servers Became Dell’s Biggest Business

Dell’s AI server division generated $16.1 billion in revenue during the quarter, eclipsing its traditional PC business. The company booked $24.4 billion in new AI server orders and ended with a record $51.3 billion backlog of unfilled AI demand. COO Jeff Clarke said the pipeline of potential projects remains several times larger than the current backlog, indicating demand shows no signs of slowing.

Wall Street Missed the Scale of AI Demand

Analysts expected $35.43 billion in revenue but Dell delivered $43.8 billion, a 24% beat. Adjusted EPS came in at $4.86 versus the $2.94 forecast, a 65% beat. Morgan Stanley analyst Erik Woodring told clients, “We got this one wrong, and our model/PT are under review.” The earnings call revealed that emerging AI use cases are driving demand beyond graphics processing units, lifting traditional servers and storage as AI agents require broader compute and data storage.

Michael Dell’s Fortune Swells as Stock Hits Record

Dell founder Michael Dell became the world’s sixth-richest person on May 29, surpassing Meta CEO Mark Zuckerberg. His wealth increased by approximately $34 billion as the stock surged. The company also announced a $9.7 billion five-year contract with the Pentagon on May 28, which the agency said could save $422 million annually. Dell raised its dividend by 20% to $2.52 annually and launched aggressive share buybacks.

What This Means for the Stock

Meyka rates DELL a B+ with a 12-month price target of $153.95, implying 63% upside from the current $420.91 price. However, the stock’s RSI at 89.48 signals overbought conditions, and the PE ratio of 48.48 reflects elevated valuation. Analysts at Morgan Stanley raised their price target after the earnings beat, though execution risks and margin sensitivity remain concerns as memory chip costs inflate.

Final Thoughts

Dell’s Q1 results confirm it has become a primary beneficiary of AI infrastructure spending. With Meyka rating the stock B+ and analyst consensus at Buy, the data points to strong fundamentals, though the overbought RSI and elevated PE ratio warrant caution on entry timing.

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