Shares of Dell Technologies soared nearly 40% in premarket trading on Friday, after robust demand for its Nvidia-powered AI servers prompted the company to raise its annual revenue and profit forecasts.
The AI server and enterprise infrastructure supplier is set to add more than $81 billion in market value at the current share price of $442.70, if gains hold.
Dell has benefited significantly from data center investments by Alphabet and Amazon, as well as price increases and improved supply chain management.
On Thursday, Dell raised its annual revenue forecast to $165 billion to $169 billion from $138 billion to $142 billion, and said it now expects AI server revenue of about $60 billion in fiscal 2027, up from $50 billion.
At least three brokerages raised their price targets on the stock after Dell’s results. The stock has a median target price of $236.5, with 19 of the 28 analysts rating it “Buy” or higher, according to data compiled by LSEG.
“This was across the board one of the most impressive quarters we’ve seen in our time covering Hardware, especially in the context of what is happening across the component universe,” analysts at Morgan Stanley said in a note.
Companies such as Dell and Super Micro Computer have been at the center of a massive shift in AI spending from software to hardware. Dell shares have more than doubled in value so far this year, outpacing the benchmark S&P 500 index’s 10.5% rise.
Shares of AI server makers, including Super Micro Computer and Hewlett-Packard, were up 10.7% and 23.5%, respectively, following Dell’s blockbuster results.
For the first quarter, Dell posted an 88% surge in revenue to $43.84 billion, handily beating the LSEG-compiled average analyst estimate of $35.43 billion.