Dell lifts FY27 outlook on AI server strength, shares up 9% after hours

DELL cleared Wall Street expectations by a wide margin in its fiscal second quarter, which ended on July 31. Adjusted earnings came in at $7.04 per share against the $4.92 LSEG consensus, and revenue of $46.97 billion beat the $44.92 billion estimate and every individual analyst forecast, growing about 58% year over year . Net income rose to $4.13 billion, or $6.34 per share, from $1.16 billion, or $1.70 per share, a year earlier. Shares moved 9% higher in extended trading on Tuesday .

The strength was concentrated in the data center. Dell's Infrastructure Solutions Group posted $31.78 billion of revenue, up 89% and ahead of the $29.61 billion StreetAccount consensus, with $16.40 billion of that coming from AI-optimized servers against a $16.07 billion estimate . Traditional servers and networking jumped 122% to $10.53 billion and storage rose almost 26% to $4.85 billion. The Client Solutions Group, which sells PCs and accessories, grew 20% to $15.03 billion but landed just under the $15.08 billion consensus, leaving the PC business as the one line that did not beat.

Guidance is where the print did the most work. For the fiscal third quarter Dell called for $6.50 in adjusted earnings per share on $49.0 billion of revenue, implying 81% growth, against LSEG estimates of $4.49 and $41.42 billion . The full-year view moved to $25.50 in adjusted EPS on $192 billion of revenue, versus the $18.92 and $172.67 billion analysts had modeled and well above the $17.90 and $165 billion to $169 billion Dell itself guided to in May. The company now expects $74 billion of AI-optimized server sales for the fiscal year, up 200%, after forecasting 103% growth just six months ago.

Management framed the traditional server line as an AI story rather than a legacy one. "We are seeing a growing trend of customers that require meaningful CPU compute capacity to support AI and agentic workflows," operating chief Jeff Clarke said on the analyst call. "These workloads are creating incremental demand for traditional servers" . The quarter also included a $9.7 billion contract to supply software to the U.S. military, and AI cloud provider Iren agreed to buy $1.6 billion of Dell hardware, including servers built around NVDA chips.

The setup going into the print was already demanding: Dell closed Tuesday up 236% year to date against an 11% gain for the S&P 500 , and finished the regular session down 6.8% before the release. That leaves the debate on execution rather than demand. Worth watching from here are whether the AI server backlog converts at the implied margin, whether the softer PC line is a timing issue or the start of a drag, and how much of the raised full-year number depends on a small number of very large customers.

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