Dell Technologies shares staged an impressive reversal in after-hours trading, surging more than 10% after the release of its quarterly report. The key driver was not just strong financial results, but a sharp jump in the backlog of orders for artificial intelligence servers and an optimistic full-year forecast that came in significantly above market expectations.
Adjusted earnings per share reached $7.04 — nearly 44% above the consensus analyst estimate, which averaged around $4.90. Revenue surged 58% year-over-year, hitting $46.97 billion. This is powerful confirmation that Dell is successfully monetizing the AI infrastructure boom sweeping the entire tech industry.
Notably, before the report was even published, the company's shares closed down 6.98% at $424.20. Traders, spooked by volatility, had priced in swings of up to 11% in either direction through options. Reality exceeded even the boldest expectations: after the numbers came out, the stock soared to $469.66. Such a vigorous reaction suggests the market had been extremely skeptical, and now that pessimism is being corrected.
Why Dell surprised the market again
Company management raised its annual guidance for the second consecutive quarter, and this is no longer just a targeted adjustment but a shift in trajectory. The initial forecast called for revenue of $167 billion and earnings of $17.90 per share. Now, the company expects around $192 billion in revenue and $25.50 in adjusted earnings per share — 42% above the previous earnings estimate.
The main catalyst is demand for AI servers, which continues to significantly outpace physical shipments. Sales in this segment doubled year-over-year, reaching $16.4 billion. But an even more important signal is the backlog of unfilled orders: it grew to a record $95 billion over the quarter, compared to $51.3 billion just three months ago. During the quarter, the company received $60.9 billion in AI server orders — more than double the entire annual revenue of that segment.
The full-year revenue forecast for AI servers has been raised to nearly $74 billion, though expectations were around $60 billion as recently as May. For the third quarter, the company is guiding for revenue of about $49 billion and earnings of $6.50 per share.
It is important to understand that even after today's jump, the stock is trading only 3% above Monday's close. Most of the gain merely offset yesterday's decline. The market has not yet fully priced in the new guidance, and ahead of us is a conference call with management, where the key questions will be the pace of converting the backlog into actual shipments and the situation with memory availability.
My take: Dell is transforming from a classic PC maker into one of the main beneficiaries of the AI revolution. The growth of the backlog to $95 billion is not just a number — it is a guarantee of revenue for years to come. However, investors should closely watch margins: AI servers generate less profit per unit than traditional enterprise hardware, and it is precisely the company's ability to balance volume and profitability that will be the key factor for further stock growth.