On Feb. 27, Dell Technologies released a forward-looking projection for its AI server business that sent its stock sharply higher before the market opened. The company said it expects AI server revenue to expand by 103% to approximately $50 billion in fiscal 2027, a forecast that underlines rising demand for infrastructure built to support artificial intelligence workloads.
Investor response was immediate. Dell’s shares climbed 11% in premarket trading to $135.17 and were set to begin the regular session at their highest levels in over two months. The market reaction reflected not only the top-line outlook for AI servers but also capital return measures the company announced: a 20% increase in cash dividends and an additional $10 billion share repurchase program.
Market commentary emphasized the scale of enterprise investment in AI infrastructure. Data center equipment makers have benefited from rapid expansion in AI, with sector leaders expected to spend at least $630 billion this year. That spending environment is a key backdrop for Dell’s projection that AI server revenue will roughly double by fiscal 2027.
"Dell’s ability to navigate cyclical challenges stems from its leadership position in AI compute for Tier 2 Cloud and Enterprises, where the significant revenue inflection is able to provide the company a lot more flexibility in managing operating margin and earnings outcomes," analysts led by Samik Chatterjee at J.P. Morgan wrote in a note.
At least three Wall Street brokerages increased their price targets on Dell following the announcements. J.P. Morgan said it expects the stock to gain at least 36% from its most recent closing price over the next year, setting a target of $165.
Operationally, Dell faces industry-wide pressures tied to memory chip pricing. The company’s PC business is contending with higher memory costs as component supply and demand shift toward AI data center builds. The elevated memory pricing environment could particularly affect segments such as gaming PCs, where memory processors are central to performance metrics like load times and frame rates.
Market research firm TrendForce revised up its outlook for Dynamic Random Access Memory pricing, raising its first-quarter 2026 growth forecast to a range of 90% to 95% from the prior quarter’s estimate. That upward revision underscores the intensity of cost pressures across PC supply chains.
Performance in Dell’s equity has diverged from some competitors over the past year. The company’s shares have markedly outperformed those of HP Inc. and China’s Lenovo Group during that period.
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