Off-exchange trading on Tuesday brought Dell Technologies shares a confident gain of more than 10%. The company reported second-quarter results that significantly beat consensus forecasts: adjusted earnings per share reached $7.04 versus the $4.90 analysts had expected.
Numbers that speak for themselves
Revenue surged 58% year-over-year, reaching $46.97 billion. Immediately after the release, shares traded around $469.66, offsetting a 6.98% decline during the regular session, where the closing price was $424.20. It is worth noting that sellers dominated all day until the report came out: traders were preparing for 11% volatility, and the off-exchange move almost exactly matched that forecast.
Dell's own expectations also turned out to be conservative. In May, management forecast revenue of $44–45 billion and earnings of $4.80 per share. The caution was not due to weak demand, but to margins: in 2024, memory prices rose, and AI servers generate less profit per unit than storage systems or corporate PCs.
AI order backlog: $95 billion — a new record
The main news is the backlog of unfilled orders. During the quarter, Dell received orders for AI servers worth $60.9 billion, and the total backlog reached a record $95 billion. For comparison: three months ago, this figure stood at $51.3 billion. AI server sales doubled year-over-year, reaching $16.4 billion.
Management raised annual forecasts for the second consecutive quarter. The company now expects revenue of around $192 billion and adjusted earnings of $25.50 per share, whereas previous forecasts were $167 billion and $17.90, respectively. The revenue forecast for AI servers was raised to nearly $74 billion from $60 billion in May. For the third quarter, Dell projects revenue of approximately $49 billion and earnings of $6.50 per share.
The market has not yet fully priced in these expectations. Shares trade at $469.66 — just 3% above Monday's close of $456.01, so most of the gain simply offset the day's decline. The intrigue now shifts to the conference call at 4:30 p.m. Eastern Time, where management will have to answer questions about memory supplies and the pace of converting the backlog into actual shipments.
My view: Dell is turning into one of the key beneficiaries of the AI boom, and the scale of the order backlog confirms that demand is far from saturation. However, investors should closely monitor margins: while revenue growth is impressive, the profitability of the AI segment remains the company's main challenge in the long term. The 2026 rally has already lifted shares from $110 to a high of $514, and current levels look justified only if the backlog continues to expand.