Dell Technologies, Inc. Class C (DELL.US) "AI printing press" accelerates: Q2 net profit skyrockets over twofold, AI server backlog reaches $95 billion, and full-year revenue guidance surges to $192 billion.

Dell Technologies, Inc. Class C (DELL.US) published an earnings report on Tuesday night that far exceeded market expectations, and it significantly raised its full-year revenue and profit forecasts again, demonstrating strong momentum in the AI server sector. Following this news, the company's stock price rose approximately 11% in after-hours trading. The earnings report showed that for the second quarter of fiscal year 2027, ending July 31, Dell Technologies, Inc. Class C achieved revenue of $46.97 billion, an increase of 58% year-over-year, surpassing the average analyst expectation of $44.92 billion. The net profit for the quarter was $4.13 billion, or $6.34 per share, more than doubling from the $1.16 billion, or $1.70 per share, in the same quarter last year. The adjusted earnings per share (excluding equity-based compensation expenses) were $7.04, far exceeding the analysts estimate of $4.92. Looking ahead, Dell Technologies, Inc. Class C provided a strong guidance for the third fiscal quarter, expecting adjusted earnings per share of $6.50 and revenue of $49 billion, which implies a year-over-year revenue growth of about 81%. Analysts had previously estimated adjusted earnings per share of $4.49 and revenue of $41.42 billion for the third fiscal quarter. The company also significantly raised its full-year performance forecasts for fiscal year 2027. Dell Technologies, Inc. Class C now expects full-year adjusted earnings per share of $25.50 and revenue of $192 billion; analysts had previously estimated adjusted earnings per share of about $18.92 and revenue of $172.67 billion. In comparison, the full-year guidance from the company given in May was an adjusted earnings per share of $17.90 and revenue ranging from $165 billion to $169 billion. The full-year revenue forecast for AI-optimized servers was raised to $74 billion, up from the previous estimate of $60 billion. This level is equivalent to an approximate year-over-year growth of 200%. Just six months ago, Dell Technologies, Inc. Class C had projected only a 103% growth for its AI server business for the year. Jeff Clarke, Chief Operating Officer of Dell Technologies, Inc. Class C, stated during the analyst call that price increases due to rising input costs have, to some extent, boosted the revenue guidance. Clarke mentioned, "In the past 12 months, we have secured over $130 billion in AI server orders." He also revealed that the number of AI server customers has exceeded 6,500, with demand expanding from new cloud vendors and sovereign entities to enterprise customers. As of the end of the second fiscal quarter, the backlog of AI server orders at Dell Technologies, Inc. Class C reached $95 billion, seen as an important leading indicator of future revenue. Infrastructure Business Strong, Traditional Server Demand Rebounds By business segment, Dell Technologies, Inc. Class C's Infrastructure Solutions Group (ISG) reported revenue of $31.78 billion for the second fiscal quarter, a year-over-year increase of 89%, surpassing the average analyst expectation of $29.61 billion. Among this, AI-optimized servers contributed revenue of $16.4 billion, exceeding market expectations of $16.07 billion. The storage business revenue was $4.85 billion, nearly a 26% year-over-year increase. Revenue from traditional servers and networking equipment surged 122% year-over-year, reaching $10.53 billion. Clarke noted, "We are seeing more and more customers needing significant CPU power to support AI and intelligent workflows, which are creating incremental demand for traditional servers." He added that just in the past two quarters, the revenue generated from traditional servers and networking business at Dell Technologies, Inc. Class C has nearly equaled the level of any complete fiscal year in the companys history. The Client Solutions Group (CSG) focused on consumer and enterprise customers generated revenue of $15.03 billion in the second fiscal quarter, a year-over-year increase of 20%, but slightly below analysts' expectations of $15.08 billion. The operating profit for this segment was $1.1 billion, a 42% increase year-over-year. Clarke mentioned that earlier this year the company noticed signs of weakness in the PC market for the second half of the year and thus "optimized resource allocation toward infrastructure business." Despite an overall decline in PC industry shipments, Dell Technologies, Inc. Class C's PC business still saw revenue growth due to price increases driven by rising costs for memory chips. The company protected its profitability by passing on the higher memory costs to customers. In terms of cost control, the operating expenses of Dell Technologies, Inc. Class C in the second fiscal quarter accounted for only 8% of sales, the lowest in the company's history. Large Orders and Market Confidence In fact, before the earnings report was released, Dell Technologies, Inc. Class C had secured several important contracts: the company won a $9.7 billion software contract from the U.S. military, and AI cloud infrastructure provider IREN (IREN.US) agreed to purchase $1.6 billion worth of Dell Technologies, Inc. Class C hardware, including servers equipped with NVIDIA Corporation (NVDA.US) chips. Additionally, Dell Technologies, Inc. Class C has already gained clients such as CoreWeave Inc. (CRWV.US) and Nscale Global Holdings Ltd. Last month, both NVIDIA Corporation and Super Micro Computer, Inc. (SMCI.US) released strong earnings forecasts, further strengthening investor confidence in the sustainability of the AI boom. The market remains optimistic about the prospects for AI infrastructure spending, with S&P Global, Inc. rating expecting AI infrastructure spending to exceed $1.3 trillion by 2027. Following Dell Technologies, Inc. Class Cs after-hours stock price increase, competitors Hewlett Packard Enterprise Co. (HPE.US) and Super Micro Computer, Inc.'s stock prices also rose. Michael Dell, founder, chairman, and CEO of Dell Technologies, Inc. Class C, tweeted after the earnings report was released: "Theres an old saying in Texaspossibly one I just made upkeep your year-over-year earnings growth over 200%, and good things will happen." According to statistics, Michael Dell is currently the fifth richest person in the world. Additionally, since retaking office last year, former President Trump has purchased shares of Dell Technologies, Inc. Class C and once again recommended the purchase of Dell Technologies, Inc. Class C computers in July, drawing attention from some investors. With the ongoing expansion of AI server demand, Dell Technologies, Inc. Class C has become one of the popular picks for betting on AI infrastructure growth. As of Tuesdays close, Dell Technologies, Inc. Class C stock price was $425, up 236% year-to-date, while the S&P 500 index has only increased by 11% during the same period. However, the stock has fallen about 14% since reaching a peak on August 13.