Dell Stock Soars 28% on AI Server Demand, Best Day Since 2018
1h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
DELLearnings
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Dell Technologies Inc. (DELL) shares surged 28% on May 29, 2026, following the release of blockbuster fiscal first-quarter earnings that significantly exceeded analyst expectations. The single-day gain marked the stock's most significant positive move since its return to public markets in 2018. The rally added approximately $25 billion to Dell's market capitalization, driven by explosive demand for the company's artificial intelligence-optimized server products. The results were announced after the market close on May 28, triggering a substantial gap up in pre-market trading that held throughout the session.
The current surge reflects a pivotal shift in enterprise technology spending priorities toward on-premise and hybrid AI infrastructure. The last major rerating for Dell occurred in Q3 2023, when shares gained 21% in a single session after initial AI server momentum became apparent. The current macro backdrop features moderating interest rates, with the 10-year Treasury yield stabilizing near 4.2%, providing a more favorable environment for capital expenditure on long-cycle hardware. The immediate catalyst was Dell reporting a doubling of its AI server backlog to $3.8 billion, signaling that demand is accelerating rather than plateauing. This growth trajectory defied concerns that the AI infrastructure build-out was concentrated solely in hyperscale cloud providers like Microsoft Azure and Amazon Web Services.
Dell's Infrastructure Solutions Group, which includes servers and storage, reported revenue of $9.2 billion, a 22% year-over-year increase. AI-optimized server revenue skyrocketed to $1.7 billion, representing a 42% sequential quarter-over-quarter gain. The company's total revenue reached $24.5 billion, surpassing the consensus estimate of $23.2 billion. Non-GAAP earnings per share came in at $1.80, beating the $1.47 forecast. The operating margin for the infrastructure unit expanded by 150 basis points to 11.5%. Dell's performance starkly contrasts with the subdued results from some enterprise software peers, highlighting a divergence in capital allocation within the tech sector. The stock's year-to-date gain now stands at 85%, compared to the S&P 500's 10% return over the same period.
| Metric | Q1 FY2026 Actual | Analyst Consensus | YoY Change |
|---|---|---|---|
| Revenue | $24.5B | $23.2B | +12% |
| EPS (Non-GAAP) | $1.80 | $1.47 | +42% |
| AI Server Revenue | $1.7B | $1.4B | >100% |
The earnings report catalyzed a broad rally in the server and hardware supply chain. Pure-play server maker Super Micro Computer (SMCI) advanced 8% on the news, while memory supplier Micron Technology (MU) gained 4%. Networking giant Arista Networks (ANET) also saw a 5% lift, reflecting optimism about increased data center bandwidth requirements. A potential risk for the sector is capex concentration, where strong enterprise and AI spending could crowd out budgets for other IT segments, potentially pressuring software-as-a-service companies reliant on new customer acquisition. Options flow data indicates significant call buying in Dell, with open interest for June $200 strike calls increasing by 150%. Hedge fund positioning, which was underweight hardware names coming into the report, is now scrambling to cover, amplifying the upward move.
The next immediate catalyst for Dell is the company's annual analyst day scheduled for June 12, 2026, where multi-year financial targets will be scrutinized. Investors will monitor the Q2 earnings report in late August for confirmation that order growth remains strong. Key technical levels to watch include $180 as near-term support, a level that was previously resistance. A sustained break above $200 would likely require continued expansion of the AI server backlog beyond the current $3.8 billion. The broader market implication hinges on whether Dell's results preannounce strong quarterly figures from other infrastructure players like Hewlett Packard Enterprise, which reports on June 4.
Dell's AI server business is a downstream beneficiary of NVIDIA's GPU dominance. While NVIDIA sells the core AI chips, Dell integrates them into full server systems alongside storage, networking, and its own software. Dell's $1.7 billion quarterly AI server revenue is a fraction of NVIDIA's data center sales, but it represents a higher-margin, integrated solution. The companies are partners rather than direct competitors, with Dell's growth providing a tangible measure of enterprise-level AI adoption beyond cloud providers.
A single-day move of this magnitude is exceptionally rare for a company of Dell's market cap, which now exceeds $110 billion. The last comparable gain was a 21% increase in August 2023, also driven by AI optimism. Prior to that, the largest moves occurred during the volatile period surrounding its return to public markets via a VMware tracking stock transaction in 2018. Such a large earnings-driven gap typically indicates a fundamental reassessment of the company's long-term growth trajectory by institutional investors.
Dell did raise its full-year revenue and EPS guidance concurrently with the Q1 report. The company now expects fiscal 2026 revenue of $98-$100 billion, up from a prior range of $95-$98 billion. The EPS guidance was lifted to $7.50-$7.80, compared to the previous $7.00-$7.40 forecast. This upward revision signals management's confidence that the AI server demand is structural and not a short-term surge, embedding higher growth into its core financial model.
Dell's earnings confirm the enterprise AI infrastructure build-out is accelerating, justifying a fundamental rerating of the stock.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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