The AI trade’s newest darling

Dell used to be the company that sold your dad a desktop. Now it’s becoming one of Wall Street’s favorite AI trades.

The old-school tech company delivered one of the strongest quarters in its history, with EPS surging 282% year over year and revenue jumping 88%, far above expectations. Dell also generated a record $4.1 billion in operating cash flow.

All of that is thanks to—you guessed it—AI. Revenue from AI servers, which now account for more than a third of Dell’s sales, soared 757% from a year ago, and Dell doesn’t see the boom slowing anytime soon: The company raised its full-year guidance, and now expects AI server revenue to hit $60 billion for fiscal 2027, up 144% year over year.

As if all of that wasn’t enough, Dell also landed a major government win. Yesterday, the Pentagon awarded the company a nearly $10 billion contract to provide software and IT services across the military, a move expected to save the government roughly $422 million annually.

The ripple effect

Unsurprisingly, shares skyrocketed 32.76% on all the good news, capping off a 104% gain in the month of May for Dell—but it wasn’t the only beneficiary.

Other hardware stocks like Super Micro Computer and Hewlett Packard Enterprise popped 11.60% and 8.12%, respectively, as Dell’s blowout quarter boosted confidence in demand across the broader AI infrastructure market.

Then there’s President Donald Trump, who bought between $1 million and $5 million worth of the stock on February 10. Nine days later he told a crowd at a Georgia rally to “go out and buy a Dell computer.” The President has enjoyed a 234% gain on his Dell investment over the last three months.

Wall Street buys in

Following Dell’s results, analysts rushed to raise their price targets on the surging stock.

Melius more than doubled its target to $565 from $280, citing strength across both traditional and AI servers, as well as improving profitability in Dell’s PC business. Mizuho also lifted its target, arguing Dell could account for more than 12% of the server market by the end of this year.

Perhaps the biggest vote of confidence came from Susquehanna, which raised its price target from $138 to $700 and upgraded the stock from Neutral to Positive. Barclays also boosted its target to $550, while JPMorgan increased its forecast to $500.

The ongoing AI supercycle has seen demand continue to exceed supply—and if Dell’s latest results are any indication, the company is quickly becoming one of Wall Street’s favorite ways to play it.—SY