Dell's Q1 performance and guidance exceed expectations, surging nearly 40% after hours

Dell Technologies' revenue and profit for Q1 of the fiscal year 2027 significantly exceeded expectations, and the company substantially raised its full-year and AI server performance guidance, with after-hours stock prices surging to nearly 40% at one point.

The company's net revenue for the first quarter was $43.84 billion, a significant increase of 88% year-over-year, while analysts expected only $35.52 billion. The adjusted operating profit was $4.24 billion, far exceeding the market expectation of $2.77 billion, and profitability significantly exceeded expectations.

The backlog and revenue expectations of the core business have been raised in tandem, with AI servers becoming the core growth engine. The company has raised its AI server revenue forecast for fiscal year 2027 from $50 billion to $60 billion, and the full-year revenue forecast has been increased to $165 billion to $169 billion.

Core Financial Data for the First Quarter Exceeds Expectations Across the Board

The Infrastructure Solutions Group's revenue for the first quarter was $29.01 billion, accounting for about 66% of total revenue, with a year-over-year increase of 181%. This division is the core pillar of the company's growth, with outstanding contributions from AI server business.

The current backlog of orders reached $51.3 billion, with new orders for AI servers amounting to $24.4 billion, providing strong support for performance growth. Ample orders ensure the certainty of revenue for the next several quarters and alleviate market concerns about the sustainability of demand.

The adjusted EPS performance was impressive, with data for the first quarter far exceeding expectations, driving the market to raise full-year profit forecasts. The company estimates the full-year adjusted EPS median at $17.90, nearly 36% higher than analyst expectations.AI Servers Become the Core Growth Engine

The demand for AI servers has grown explosively, with quarterly revenue of $16.1 billion, a staggering 757% year-over-year increase. This business has become the core driver of overall performance, with a growth rate significantly higher than traditional businesses.

The company has raised its AI server revenue forecast for fiscal year 2027 to $60 billion, a 20% increase from previous expectations. Management stated that there are no signs of slowing AI opportunities, and market demand remains high.

Traditional server and networking businesses also grew in sync, with first-quarter revenue of $8.5 billion, a year-over-year increase of 92%. The robustness of traditional businesses combined with the explosive growth of AI businesses together push up the company's overall revenue scale.Full-Year and Q2 Guidance Raised Significantly

The second-quarter revenue forecast is $44 billion to $45 billion, significantly higher than the analyst expectation of $35.06 billion. The quarterly guidance exceeds expectations, reflecting the company's strong confidence in short-term growth.

The full-year revenue forecast has been raised from $138 billion to $142 billion to $165 billion to $169 billion, an increase of over 20%. The significant increase is mainly due to the unexpected demand for AI server business.

The full-year adjusted EPS median forecast is $17.90, a significant increase from the original expectation of $12.90. The increase in profit expectations highlights the strong driving effect of AI business on profitability.Market Reaction and Industry Impact

After the release of the financial report, Dell's stock price continued to rise in the after-hours market, with the increase gradually expanding to nearly 40%. The significant rise in stock prices reflects the market's high recognition of the company's AI transformation effectiveness.

The high demand for AI servers continues, and Dell, as a core supplier, fully benefits. The company's performance validates the high growth logic of the AI infrastructure track, which is expected to drive the related targets of the industry chain to strengthen.

Analysts believe that Dell's better-than-expected performance may reshape the market's valuation logic for the technology hardware sector. The continuous release of AI computing power demand may maintain the high prosperity of hardware manufacturers capable of delivery.