^{Photo: The Economic Times}

Dell Technologies is doubling down on the AI boom, and investors are taking notice.

Shares of Dell Technologies jumped in after-hours trading on Thursday after the Texas-based tech giant issued a stronger-than-expected forecast for the current quarter and raised its full-year profit guidance, citing surging demand for artificial intelligence systems.

While Dell’s fiscal first-quarter earnings missed analysts’ expectations, the company’s bullish outlook, backed by an accelerating shift toward AI infrastructure, sent a strong signal to Wall Street.

Q1 Earnings Snapshot: A Mixed Bag

Dell reported adjusted earnings per share (EPS) of $1.55, falling short of the $1.69 expected by analysts surveyed by LSEG (formerly Refinitiv). However, revenue came in at $23.38 billion, slightly above the $23.14 billion estimate.

Despite the EPS miss, Dell’s results marked a 5% year-over-year increase in revenue, indicating underlying business momentum amid a tech market rebound.

AI Systems Take Center Stage

The real story, however, lies in Dell’s aggressive pivot to artificial intelligence.

The company said it expects $2.25 in adjusted EPS in the current quarter, with revenue projected between $28.5 billion and $29.5 billion — significantly above Wall Street’s consensus. A major contributor: $7 billion worth of AI systems scheduled to ship this quarter, driven by high-margin sales.

Dell is one of Nvidia’s core hardware partners, building powerful systems around the chipmaker’s cutting-edge GPUs. Demand for these systems is “unprecedented,” according to Dell, particularly from second-tier cloud infrastructure providers like CoreWeave, which are racing to catch up in the AI arms race.

Record AI Backlog Builds Confidence

Dell also revealed it has $14.4 billion worth of AI system orders in its backlog — orders confirmed but not yet shipped. In Q1 alone, the company booked $12.1 billion in AI-related orders, an impressive chunk that will convert into revenue in the coming quarters.

Earlier this year, Dell projected it would generate $15 billion in AI server sales in fiscal 2026, up from $10 billion last year. The pace of new orders suggests the company is on track — or even ahead — of that trajectory.

Infrastructure and PC Divisions Rebound

Dell’s Infrastructure Solutions Group (ISG), which includes servers and storage, posted $10.3 billion in sales in the first quarter — a 12% increase year-over-year. Within that, servers and networking generated $6.3 billion, while data storage systems contributed $4 billion.

Meanwhile, Dell’s Client Solutions Group, which houses its laptop and PC business, recorded $12.5 billion in sales. That marks a significant uptick, as the global PC market shows signs of recovery after enduring sluggish growth during and after the pandemic.

Industry research firms like IDC and Gartner have also predicted a 4-6% global PC shipment growth in 2025, supported by refresh cycles and enterprise demand driven by hybrid work models.

Shareholder Returns Soar

Dell is also rewarding investors generously. The company spent $2.4 billion on share buybacks and dividends in Q1 alone. That’s nearly as much as the $2.58 billion it spent on buybacks during the entire fiscal year 2025, which ended in January.

This aggressive capital return underscores Dell’s confidence in its financial strength and future cash flow generation, especially with AI becoming a long-term growth catalyst.

Looking Ahead: Cautious Optimism Amid AI Tailwinds

For the full fiscal year, Dell reaffirmed its revenue projection of $103 billion, aligning with LSEG estimates. But it revised its full-year adjusted EPS forecast to $9.40, a 10-cent increase from its prior outlook — signaling a strong profit outlook as AI continues to reshape the tech landscape.

With a robust product pipeline, deep enterprise relationships, and a central role in the AI infrastructure buildout, Dell is positioning itself as more than just a PC maker — it’s becoming a key enabler of the AI-driven digital future.

Bottom Line

While Q1 results came with mixed headlines, Dell’s long-term prospects are being rewritten by its rapid expansion into the high-growth AI systems market. For investors and analysts alike, the company’s surging backlog, increasing margins, and rising shareholder payouts present a compelling case for optimism.

As the AI wave builds, Dell is no longer riding it — it’s helping build the surfboards.