Dell Stock Reverses 6.8% Sell-Off, Surges After $25 Billion Forecast Raise Flips the AI Trade

The session into Dell's results saw a 6.8% slide, but Dell Technologies shares closed at $425 on Tuesday ahead of the release, then jumped nearly 11% by Wednesday morning after the company raised its fiscal 2027 revenue forecast by $25 billion.

The quarter itself was not weak. Fiscal second-quarter revenue reached $46.97 billion, up 58% year on year, while adjusted diluted earnings per share came in at $7.04 against Wall Street estimates of $44.92 billion in revenue and $4.91 in adjusted EPS.

What changed the tape was guidance. Dell now expects fiscal 2027 revenue of $192 billion, up from $167 billion, while adjusted EPS is forecast at $25.50, up from $17.90.

The AI-specific increase was even sharper. Dell raised its AI-optimised server revenue forecast to $74 billion from $60 billion, implying 200% growth against 69% across the company as a whole.

Why the Print Looked Sellable

The results also gave investors a clear supply-side risk to weigh. Dell vice-chairman and chief operating officer Jeff Clarke said the binding constraint remained 'DRAM, DRAM, DRAM, followed by NAND, NAND, NAND', while the company also cited patchy CPU availability and tight disk-drive supply.

Demand had exceeded supply in each of the previous two quarters. That creates a straightforward question around the $95 billion AI-server backlog: how quickly can Dell convert those orders into revenue if critical components remain constrained?

The operating numbers showed why the issue mattered. Infrastructure Solutions Group revenue rose 89% to $31.8 billion, while AI-optimised server revenue doubled to $16.4 billion.

AI-server orders reached $60.9 billion during the quarter, and Dell's AI customer base across Neocloud, sovereign and enterprise accounts surpassed 6,500. Traditional servers and networking revenue also rose 122% to $10.5 billion, showing that the infrastructure acceleration extends beyond AI-optimised servers.

Yet Dell raised its AI-server forecast while describing supply as the binding constraint. That changed the interpretation of the shortage: rather than simply limiting near-term revenue, constrained supply was being reported alongside a materially higher outlook.

What Changed Overnight

The scale of the raise was the clearest new information. Dell increased its total fiscal 2027 revenue forecast by $25 billion and its AI-optimised server forecast by $14 billion, while its existing order book provided further visibility into demand.

Chief financial officer David Kennedy tied the increase to accelerating AI demand across Dell's portfolio.

Third-quarter guidance also came in at about $49 billion of revenue and $6.50 in adjusted EPS, against Street revenue expectations of roughly $41.4 billion.

Dell ended the quarter with a $95 billion AI-server backlog and said it had booked $131.7 billion of AI-server orders over the previous 12 months.

The figures put the higher forecast against a substantial pool of existing demand rather than relying solely on a stronger quarterly print.

Wall Street responded with higher targets, although not uniformly bullish ratings. Melius Research raised its target to $735 from $650, Citi moved to $600 from $515, and Morgan Stanley lifted its target to $499 from $434 while retaining an Equal Weight rating.

The reaction also spread across AI infrastructure stocks. Reuters reported that Super Micro Computer rose about 2.2% and Hewlett Packard Enterprise gained about 1.4% as the sector responded to Dell's stronger outlook.

Dell also said operating expenses should represent about 8% of full-year revenue, its lowest rate in 42 years. The company returned $4.3 billion through buybacks and dividends during the quarter.

Tuesday priced the shortage. Wednesday priced $192 billion of revenue, a $95 billion backlog and a $74 billion AI-server forecast, after Dell raised the numbers anyway.