Dell Technologies rides AI boom as revenue surges 88% in Q1

Dell Technologies delivered a blowout first quarter with revenue growth of 88% amid sales of AI systems.

The company reported first quarter earnings of $5.24 billion on revenue of $43.8 billion, up 88% from a year ago. Non-GAAP earnings were $4.86 a share.

Wall Street was looking for Dell first quarter non-GAAP earnings of $2.90 a share on revenue of $35.38 billion.

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Jeff Clarke, vice chairman and chief operating officer of Dell Technologies, said the company booked $24.4 billion in AI orders and recognized $16.1 billion in AI server revenue.

"We’re increasing our AI server revenue expectations for FY27 to $60 billion, which only goes to show the AI opportunity shows no signs of slowing," said Clarke.

Indeed, Dell is racking up AI sales to hyperscalers and enterprises. The AI demand is also raising the rest of Dell's business. In addition, Dell appears to be managing a volatile supply chain well.

As for the outlook, Dell said its fiscal 2027 revenue will be about $167 billion, up 50% for the year, with earnings of $17.31 a share.

By the numbers for the first quarter:

• Dell's Infrastructure Solutions (ISG) group reported revenue of $29 billion, up 181% from a year ago. AI optimized server revenue was $16.1 billion, up 757% from a year ago.
• Traditional servers and networking revenue was $8.5 billion in the first quarter, up 92% from a year ago.
• ISG operating income was $3.1 billion.
• The PC division delivered first quarter sales of $14.6 billion, up 17% from a year ago. Commercial revenue was $13 billion, up 18% from a year ago. Operating income was $1.2 billion, up 79%.
• The company said it had more than 5,000 AI server customers with strong growth across neocloud, sovereign and enterprise customers.

Dell said second quarter revenue will be $44 billion to $45 billion, up 49% at the midpoint, with non-GAAP earnings of $4.80 a share. AI-optimized server revenue in the second quarter will be $60 billion.