Dell shares jump after AI server backlog hits record $95 billion

Dell Technologies shares climbed as much as 10 percent in early trading Wednesday after the company reported record quarterly revenue and, for the third time this fiscal year, raised its outlook on surging demand for the AI-optimized servers it sells to data-center operators and cloud giants.

The computer maker's second-quarter results, disclosed in a filing with the Securities and Exchange Commission, showed revenue of $47.0 billion for the three months ended August 1, up 58 percent from a year earlier and ahead of Wall Street estimates. Non-GAAP diluted earnings per share reached $7.04, more than double the year-ago figure.

AI orders outrun supply

The headline number was the AI server business: Dell booked $60.9 billion in orders during the quarter, recognized $16.4 billion of AI-server revenue, and exited the period with a record $95 billion backlog — orders taken but not yet shipped, filled or billed. That backlog is now roughly double what it was six months ago, a sign that hyperscalers and enterprises are still adding capacity for large language models faster than manufacturers can build it.

Based on that momentum, Dell told investors in its official results announcement that it now expects full-year fiscal 2027 revenue of about $192 billion, up roughly $25 billion from its prior forecast, and AI-optimized server revenue of $74 billion, up from an earlier $60 billion target and more than triple last year's total. Full-year non-GAAP earnings guidance rose to $25.50 a share.

"With AI momentum accelerating and our opportunity expanding across the portfolio, we're raising our full-year FY27 revenue outlook by $25 billion to $192 billion, up nearly 70 percent year over year," Dell chief financial officer David Kennedy said in the earnings release, adding the company also returned a record $4.3 billion to shareholders in the quarter through buybacks and dividends.

"IT environments have shifted from cost centers to value drivers that fuel growth and competitive advantage, and customers are investing accordingly — creating opportunity across our portfolio," said Jeff Clarke, Dell's vice chairman and chief operating officer.

Traditional servers and networking revenue rose 122 percent year over year, while storage grew 26 percent and the client solutions unit that sells PCs and laptops was up 20 percent, according to the 8-K filing furnishing the results to the SEC. The breadth of the growth suggests the AI buildout is also pulling through demand for conventional data-center gear, not just the specialized servers built around Nvidia and AMD chips.

Investors rewarded the report: shares had slipped nearly 6 percent in the session before the release amid jitters over high expectations, then reversed sharply, with the after-hours and premarket gains adding roughly $26 billion to Dell's market value at a price near $465, according to a Reuters report on the results. Analysts had gone into the print divided over whether soaring server costs and thin margins on AI hardware would eventually squeeze profitability, a concern that has weighed on Dell's stock even during its recent run-up.

For now, industry analysts noted that Dell's backlog growth outpaced even its own aggressive revenue guidance, meaning the company is still turning away business it cannot yet fulfill. Dell guided to third-quarter adjusted earnings of about $6.50 a share on roughly $49 billion in revenue, implying continued growth of more than 80 percent from a year earlier.

The results land as rival server and PC makers, along with chipmakers Nvidia and AMD, prepare their own updates in the coming weeks, with investors watching for signs of whether the AI infrastructure spending cycle is broadening or concentrating among a handful of winners.