Dell Technologies delivered a powerful surprise to the market: the company's shares surged more than 10% in after-hours trading following the release of quarterly results that exceeded even the boldest analyst expectations. Adjusted earnings per share reached $7.04, while the consensus forecast had anticipated only about $4.90.
Revenue for the reporting period grew 58% year-over-year, reaching $46.97 billion. This is an impressive acceleration, especially against the backdrop of the company's own cautious forecasts announced in May, when management expected revenue in the range of $44–45 billion.
Why shares were falling before the release
Notably, Dell's stock was under pressure ahead of the earnings report: during Tuesday's regular session, it closed down 6.98% at $424.20. Sellers dominated throughout the day, with traders bracing for a volatile market reaction in either direction. Options expiring on Friday priced in an 11% swing, and the after-hours movement (+10.59%) almost exactly matched that forecast.
Investor caution was entirely understandable. In 2024, memory prices have been rising, and AI servers generate lower marginal profit per unit compared to storage systems or enterprise PCs. However, reality turned out to be far more optimistic.
AI order backlog: $95 billion and a new forecast
Sales of servers optimized for artificial intelligence doubled year-over-year, reaching $16.4 billion. But the headline news is the order backlog. During the quarter, Dell received $60.9 billion in AI server orders, and the total backlog of unfilled orders hit a record $95 billion. For comparison, just three months ago, that figure stood at $51.3 billion.
Demand is clearly outpacing physical equipment shipments, confirming the company's dominant position in the supply chain for AI infrastructure.
For the second consecutive quarter, management has raised its annual forecasts. The company now expects revenue of around $192 billion and adjusted earnings of $25.50 per share, compared to previous figures of $167 billion and $17.90, respectively. The revenue forecast for AI servers has been raised to nearly $74 billion from May's $60 billion. In the third quarter, Dell expects approximately $49 billion in revenue and $6.50 in adjusted earnings per share.
Despite the impressive numbers, the market has not yet fully priced in these expectations. The stock is trading at $469.66 — just 3% above Monday's close of $456.01, meaning most of the gain merely offset Tuesday's decline.
The intrigue remains: management will need to answer questions about memory supplies and the pace of converting backlog into actual shipments. Dell's stock rally in 2026 has already lifted shares from roughly $110 to a high of $514, and now the market views the company as one of the biggest beneficiaries of the AI boom, with expectations of further growth.
My view: The record $95 billion order backlog is not just a number but a signal of a structural shift. Dell is transforming from a classic PC manufacturer into a key player in AI infrastructure, and if the pace of backlog conversion holds, the current valuation could prove conservative. However, investors should keep an eye on margins: volume growth does not always translate into proportional profit growth.