While the market was still heatedly discussing the parameter competition and computing power gap in large AI models, Dell Technologies (DELL) rewrote the narrative with a stunning quarterly report. In the first quarter of fiscal year 2027, Dell’s revenue surged 88% to $43.8 billion, net profit more than tripled, AI server revenue skyrocketed 757% year-over-year, new AI orders reached $24.4 billion, and backlog orders broke through a historic high of $51.3 billion.
As of press time, Dell’s stock price jumped about 35% in early trading on Friday, with year-to-date gains exceeding 150%, and its total market capitalization is poised to hit $280 billion. JPMorgan Chase raised its price target from $280 to $500, while Morgan Stanley, which had long held a cautious stance, also admitted to a “misjudgment” and began reassessing its models and valuation framework.
In response to analysts’ repeated questions about whether the demand was real or pulled forward, Jeff Clarke, Dell’s Vice Chairman and Chief Operating Officer, gave a clear answer during the conference call: the current core bottleneck lies entirely on the supply side. Dell’s supply chain faces four major shortages, ranked by severity: DRAM, NAND, CPUs, and hard drives, with memory being the most critical.
Clarke stated that the company is repricing almost daily, and customers are feeling the pressure. Due to persistent supply constraints, many large customers have begun proactively signing three- to five-year long-term supply agreements to secure future capacity—an extremely rare occurrence in hardware procurement history. Driven by both inflationary pressures and anxiety over shortages, Dell has gained stronger pricing power. Melissa Otto, Head of Research at S&P Global Visible Alpha, commented that thanks to its scale advantages and supplier relationships, Dell is better positioned than its competitors during the shortage.
Following the earnings release, major Wall Street institutions quickly updated their ratings. JPMorgan Chase maintained an “Overweight” rating and significantly raised its price target to $500, noting that Dell is experiencing not only rapid growth in AI servers but also a clear recovery in its traditional server and PC businesses, undergoing “resonant growth across all business lines.” Citi maintained a “Buy” rating and raised its target to $475. Melius raised its target to $565. Bank of America Securities raised its target to $500, and Piper Sandler raised its target to $497.
The most notable move came from Morgan Stanley, which had previously held the most conservative stance. Analysts admitted in their report to a “misjudgment” and announced they were reassessing their models and price targets. Morgan Stanley pointed out that Dell surpassed expectations in nearly all business areas: infrastructure revenue jumped 181% year-over-year, AI demand continues to far exceed supply, traditional server demand remains strong, storage business achieved its best growth rate in nearly three years, and full-year profit forecasts have been raised by nearly 40%.
Market observers noted that Dell’s stock price surge indicates that the AI rally is spreading from GPU chip manufacturers to system manufacturing, server integration, and data center infrastructure. Dell also secured a long-term contract worth $9.7 billion from the U.S. Department of Defense, further solidifying its position as an enterprise-grade infrastructure provider.
At least based on current market sentiment, Wall Street is more inclined to believe that the boom in AI infrastructure construction may have only just begun.
