Dell had one of the best single trading days in its history on Friday.
Shares jumped nearly 19 percent after the company dropped its fourth-quarter earnings Thursday night and blew past everything Wall Street expected.
Having under-performed for most of the year, today was the turnaround the company needed. Here is what happened.
Dell Beat Estimates By $2 Billion
The company reported $33.4 billion in revenue for the quarter. Analysts were expecting $31.4 billion. That is a $2 billion beat. Earnings per share came in at $3.89 against an estimate of $3.52.
The stock was trading around $121 before the report dropped. By Friday morning it was near $141.
For context, Dell’s stock had been down more than five percent on the year heading into Thursday. The stock had underperformed the S&P 500 for twelve straight months. This quarter certainly ended that conversation.
Why Did Dell Stock Go Up?
Dell’s infrastructure division, which is the part of the company that builds AI servers for data centers, posted $19.6 billion in revenue for the quarter. That is up 73 percent from the same period last year.
AI orders for the quarter alone came in at $34.1 billion. The company ended the quarter with a $43 billion backlog of AI orders still waiting to ship.
On the earnings call, CEO Jeff Clarke described a pipeline that runs five quarters deep across enterprises, cloud providers, financial trading firms running high-frequency algorithms, and government buyers including the U.S. Department of Energy.
The demand is not coming from one type of customer. Clarke said on the call:
“ISG is at record levels with accelerating AI demand. We out-executed across the portfolio.”
For the full fiscal year, Dell took in $64.1 billion in AI orders total. The company is now projecting its AI server revenue hits $50 billion in fiscal 2027, more than double what it shipped this year.
What Comes Next For Dell?
Dell’s average analyst price target is now around $158. The most bullish analyst on Wall Street has a $200 target. At least three firms raised their price targets Friday morning following the earnings beat.
The stock still trades at roughly 11 times forward earnings, a significant discount to most AI-adjacent tech stocks, which trade at 20 to 30 times.
That gap is exactly the argument Dell bulls have been making for two years: this is an AI infrastructure play being priced like a PC company.
The one complication is rising memory prices. A historic memory shortage is pushing up component costs across the industry and Dell raised prices on customers in January to offset it.
Bank of America analyst Wamsi Mohan kept his buy rating and lifted his price target to $155 but noted that demand elasticity at the new price points is still an unknown.
Dell’s CFO pointed to the last industry-wide memory shortage as precedent. Last time it happened, Dell took market share while competitors were slower to react.
The next real test is Q1 fiscal 2027. That is the first earnings print where Wall Street will measure whether the $140 billion full-year revenue target Dell outlined on Thursday is actually on track.
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