NEW YORK, Feb 27, 2026, 10:36 EST
- Dell shares surged 17.5% after the company projected its AI server revenue will double in fiscal 2027.
- Dell is now projecting fiscal 2027 revenue between $138 billion and $142 billion, while also bumping up shareholder returns through a larger dividend and expanded buyback.
- Margins and PC demand are still heavily influenced by rising memory-chip costs.
Dell Technologies shares surged 17.5% on Friday as the company projected its AI server revenue—those specialized machines powering AI model training and execution—will double by fiscal 2027.
The forecast drops into a market still trading the AI build-out nearly one day at a time. Hardware stocks aren’t getting graded on PC cycles so much as their ability to deliver data-center hardware—and do it without cratering margins.
Dell is looking for fiscal 2027 revenue to land somewhere between $138 billion and $142 billion, projecting its AI-optimized server sales could more than double—up 103%—to roughly $50 billion. That’s as large tech players gear up to pour at least $630 billion into AI infrastructure this year, a spending spree poised to benefit vendors like Dell and Super Micro Computer. For the fourth quarter, Dell posted all-time high revenue at $33.4 billion, with adjusted earnings of $3.89 a share. Infrastructure solutions revenue soared 73% to $19.60 billion, while the client solutions group brought in $13.49 billion, up 14%. The company now counts over 4,000 AI server customers, including names like Elon Musk’s xAI and CoreWeave. Dell also bumped up its cash dividend by 20% and added $10 billion to its buyback program. COO Jeff Clarke noted customers initially balked at price hikes linked to U.S. trade policies and pricier memory chips. Hendi Susanto at Gabelli Funds described the moves as “getting ahead of a challenge that continues to pressure peers”. Reuters
Dell posted a gross margin of 20.5% in the fiscal fourth quarter, edging past guidance despite higher memory costs, according to MarketWatch. The infrastructure unit’s operating margin climbed to 14.8%, lifted by more business in storage and increased sales of Dell-branded products.
AI-optimized servers push massive workloads through processors fast, but that creates a memory bottleneck. The go-to chip here is dynamic random access memory (DRAM), which keeps data close to the processor—essential for handling quick AI computations.
This is exactly what makes a “memory squeeze” more than just a supply-chain detail. Should chips grow either too pricey or too hard to get, vendors face a tough call: pass higher costs onto customers, or absorb the hit themselves. Neither route works out smoothly in the PC market, where pricing remains a razor-thin game.
The same memory shortage that’s driving AI server sales is also making life tougher for Dell’s PC division—especially its gaming lineup, where top-tier memory matters most. Dell’s stock touched a three-month peak at $142.31 earlier, while TrendForce bumped up its outlook for first-quarter 2026 DRAM price gains to 90%–95% over the previous quarter. Dell’s been coping with those rising costs more nimbly than HP or Lenovo, though it hasn’t dodged the squeeze entirely. J.P. Morgan analysts, including Samik Chatterjee, point to Dell’s AI edge as giving the company “more flexibility in managing operating margin and earnings outcomes.” The bank is looking for the shares to reach $165 in the next year. Reuters
Dell’s move to bump up its dividend and expand its buyback signals it’s leveraging the AI wave to commit to more reliable cash payouts.
Investors are eyeing whether Dell can turn demand into actual shipments this time—without triggering fresh price pushback.
The company is counting on continued demand for the servers fueling AI, while memory stays the main bottleneck for now.
