Dell Technologies saw its stock price climb 4% on Friday, driven by strong demand for its AI-powered servers, which led the company to increase its full-year earnings and revenue projections.
The boost in Dell’s fortunes comes following its strategic partnership with Nvidia earlier this year, enhancing its AI capabilities and attracting mid-sized enterprises to upgrade their server infrastructure. Despite the strong performance in AI servers, Dell’s revenues from storage and PCs fell short of expectations, according to Bernstein analysts.
The company reported a 38% year-over-year increase in revenue from its infrastructure solutions group, which includes server sales. The revenue from AI-optimized servers, notably the PowerEdge XE9680, saw a 23% sequential rise, reaching $3.2 billion. Dell’s AI pipeline is now estimated at $11 billion to $13 billion, up from an earlier forecast of $8 billion to $10 billion.
Dell’s earnings came in at $1.89 per share on an adjusted basis, with revenue totaling $25.03 billion, both surpassing LSEG estimates. Following the results, several brokerages raised their price targets for Dell, with a median target of $155 and 19 out of 22 analysts rating the stock as a “buy” or higher.
However, despite this recent surge, Dell’s shares are down 36% from their peak in May, currently trading at $115.
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