Dell shares jump 35% after surge in AI server sales

In short: Dell’s share price rose 35% after the company reported much higher sales, led by a big jump in AI server revenue.

What's going on

Dell Technologies, a company known for personal computers and business servers, saw its shares rise 35% on Friday. The stock hit a record high of $429 in New York trading.

The move followed Dell’s results for its fiscal first quarter, released late Thursday. Dell said overall sales rose 88% compared with the same period a year earlier, reaching $43.8bn.

A key driver was Dell’s “AI servers,” which are powerful computers used by companies to run artificial intelligence systems (think of them like the heavy duty engines that power AI). Dell said revenue from these AI servers jumped 757% to $16.1bn. The servers use chips from Nvidia, a leading supplier of the specialized processors used for AI.

Dell also raised its outlook for the year. It said it expects revenue of up to $169bn for the full year, above the $142bn expected by analysts.

The rally in Dell is part of a broader pattern on Wall Street. Investors have been buying shares in companies tied to AI, including chipmakers and hardware suppliers. The tech focused Nasdaq Composite index was on track for an 8.5% gain in May, according to the Financial Times report.

What to watch

Some market watchers are warning that expectations may be getting too high, meaning future results will need to stay strong to justify today’s prices. Investors will likely watch whether demand for AI servers keeps growing and whether Dell can deliver on its higher full-year revenue forecast.

Source: Financial Times