Dell Technologies shares made a powerful leap in after-hours trading on Tuesday, rising more than 10%. The reason — an impressive quarterly report that surpassed all market expectations. Adjusted earnings per share came in at $7.04 versus the analyst consensus forecast of $4.90. This is not just an exceedance — it is a true rout of expectations.
Revenue for the reporting period grew 58% year-over-year, reaching $46.97 billion. Immediately after the release, shares traded around $469.66, while the closing price in the regular session was $424.20, down 6.98%.
Why Dell shares were falling before the report release
Throughout the trading day before the earnings release, sellers dominated the market. Traders were bracing for a volatile reaction in either direction. Options expiring on Friday priced in an 11% swing — and the after-hours move (+10.59%) almost perfectly matched that forecast.
Notably, Dell itself had lowered the bar of expectations in advance. In May, management forecast revenue of $44–45 billion and adjusted earnings of $4.80 per share. The caution was explained not by weak demand, but by margins: in 2024, memory became more expensive, and AI servers bring less profit per unit than storage systems or corporate PCs.
AI order backlog exceeds $95 billion — Dell raises guidance
Sales of AI-optimized servers doubled year-over-year, reaching $16.4 billion. However, the main news is orders. During the quarter, Dell received $60.9 billion in AI server orders, and the total backlog of unfilled orders reached a record $95 billion. Three months ago, this figure stood at $51.3 billion.
Demand still noticeably outpaces Dell's physical equipment shipments. Management has raised annual guidance for the second consecutive quarter. The company now expects revenue of around $192 billion and adjusted earnings of $25.50 per share. The previous forecast was $167 billion and $17.90, respectively.
The revenue forecast for AI servers now stands at nearly $74 billion — in May, they expected $60 billion. In the third quarter, Dell expects approximately $49 billion in revenue and adjusted earnings of $6.50 per share.
The market has not yet fully priced in these expectations. The stock trades at $469.66 — just 3% above Monday's close of $456.01. Most of the gain merely offset Tuesday's decline. The intrigue now shifts to the conference call at 4:30 p.m. Eastern Time. Management will need to answer questions about memory supplies and the pace at which the backlog is converting into actual shipments.
My view: Dell's rally in 2026 has already lifted the stock from around $110 to a high of $514. The market now values the company as one of the largest AI beneficiaries, from which further growth is expected. However, the key risk is the ability to convert the record order backlog into margin profit amid a component shortage. If Dell confirms the sustainability of this conversion, the current valuation may prove conservative.