Shares of Dell Technologies jumped 17.5% on Friday (February 27) after the company projected that revenue from its artificial intelligence (AI) server business will more than double in fiscal 2027.
The stock climbed to $142.31, a three-month high, putting it on track for its biggest one-day gain in nearly two years.
Dell said it expects AI server revenue to grow 103% to about $50 billion in fiscal 2027, highlighting strong demand for AI infrastructure.
Data center equipment makers have been riding a wave of AI-driven spending, with industry leaders projected to invest at least $630 billion this year in expanding AI capabilities.
The upbeat forecast fueled investor optimism that Dell is well-positioned to capitalize on the AI boom.
Shareholder returns boost sentiment
Investors also welcomed Dell’s announcement of a 20% increase in cash dividends and an additional $10 billion share repurchase program.
The move signaled confidence in the company’s cash flow outlook and long-term growth trajectory.
At least seven Wall Street brokerages raised their price targets on the stock. Analysts at JPMorgan Chase said they expect Dell shares to rally at least 36% over the next year, setting a target of $165.
AI leadership offsets PC headwinds
In a note to clients, JPMorgan analysts led by Samik Chatterjee said Dell’s leadership in AI compute for Tier 2 cloud providers and enterprises gives it flexibility in managing margins and earnings.
“Significant revenue inflection is able to provide the company a lot more flexibility in managing operating margin and earnings outcomes,” the analysts wrote.
While Dell’s data center business is booming, its traditional PC manufacturing division faces challenges from rising memory chip costs as suppliers prioritize AI data center demand.
Memory costs pose risk to gaming segment
The increase in memory chip prices could particularly affect Dell’s gaming PC business, where high-performance memory is critical for smooth gameplay and fast load times.
Market research firm TrendForce revised its first-quarter 2026 forecast for Dynamic Random Access Memory (DRAM) price growth to 90%–95%, up from earlier estimates.
Despite cost pressures, Dell has managed to outperform rivals such as HP Inc. and Lenovo Group over the past year.
Outperformance in the AI era
Dell’s stock has significantly outpaced both HP and Lenovo over the past 12 months, reflecting investor confidence in its AI-driven growth strategy.
With strong AI server momentum and enhanced shareholder returns, Dell appears to be positioning itself as one of the key beneficiaries of the global AI infrastructure expansion.
(With Reuters inputs)
