Shares of Dell Technologies (DELL +4.39%) charged sharply higher Wednesday morning, gaining as much as 11.9% in early trading. However, by 10:27 a.m. ET, the stock had given back some of its gains, though it was still up 5%.
The catalyst that sent the computer and artificial intelligence (AI) specialist higher was its financial results, which were robust by any measure.
Image source: The Motley Fool.
The AI boon
For its fiscal 2027 second quarter (ended July 31), Dell delivered record revenue of $47 billion, up 58% year over year. Operating leverage helped expand the company's margins, resulting in record adjusted diluted earnings per share (EPS) of $7.04, which surged 203%.
For context, analysts' consensus estimates called for revenue of $44.5 billion and adjusted EPS of $4.92, so Dell surpassed expectations by a wide margin.
While gains came across the breadth of the company's offerings, the AI server business captured the spotlight. Chief operating officer Jeff Clarke detailed the results, saying, "We booked a record $60.9 billion in orders, recognized a record $16.4 billion in revenue, and exited the quarter with a record $95 billion backlog." Despite the focus on AI, he went on to say that Dell experienced broad-based revenue growth.
NYSE: DELL
Key Data Points
Both of the company's main operating segments delivered robust gains. The Infrastructure Solutions Group (ISG) generated record revenue of $31.8 billion, up 89% year over year, driven by AI-optimized server sales, which rose 100%, and by traditional servers and networking revenue, which jumped 122%. The Client Solutions Group (CSG) delivered revenue of $15 billion, up a respectable 20%, driven by record commercial client revenue of $13.2 billion, up 22%.
Management raised the company's already robust full-year guidance, increasing its revenue forecast to $192 billion, up 69%, while guiding for adjusted diluted EPS to $25.50, up 148%.
After initially rocketing higher, Dell stock gave back most of its gains. However, given that the stock has risen 250% thus far in 2026, there's likely some profit-taking going on.
Yet even in the wake of Dell's impressive growth spurt, the stock is remarkably cheap, selling for 26 times earnings, a bargain considering the company's accelerating growth.
