Why Dell Stock Rocketed Higher Wednesday Morning

Shares of Dell Technologies (NYSE: DELL) charged sharply higher Wednesday morning, gaining as much as 11.9% in early trading. However, by 10:27 a.m. ET, the stock had given back some of its gains, though it was still up 5%.

The catalyst that sent the computer and artificial intelligence (AI) specialist higher was its financial results, which were robust by any measure.

The AI boon

For its fiscal 2027 second quarter (ended July 31), Dell delivered record revenue of $47 billion, up 58% year over year. Operating leverage helped expand the company's margins, resulting in record adjusted diluted earnings per share (EPS) of $7.04, which surged 203%.

For context, analysts' consensus estimates called for revenue of $44.5 billion and adjusted EPS of $4.92, so Dell surpassed expectations by a wide margin.

While gains came across the breadth of the company's offerings, the AI server business captured the spotlight. Chief operating officer Jeff Clarke detailed the results, saying, "We booked a record $60.9 billion in orders, recognized a record $16.4 billion in revenue, and exited the quarter with a record $95 billion backlog." Despite the focus on AI, he went on to say that Dell experienced broad-based revenue growth.

Both of the company's main operating segments delivered robust gains. The Infrastructure Solutions Group (ISG) generated record revenue of $31.8 billion, up 89% year over year, driven by AI-optimized server sales, which rose 100%, and by traditional servers and networking revenue, which jumped 122%. The Client Solutions Group (CSG) delivered revenue of $15 billion, up a respectable 20%, driven by record commercial client revenue of $13.2 billion, up 22%.

Management raised the company's already robust full-year guidance, increasing its revenue forecast to $192 billion, up 69%, while guiding for adjusted diluted EPS to $25.50, up 148%.

After initially rocketing higher, Dell stock gave back most of its gains. However, given that the stock has risen 250% thus far in 2026, there's likely some profit-taking going on.

Yet even in the wake of Dell's impressive growth spurt, the stock is remarkably cheap, selling for 26 times earnings, a bargain considering the company's accelerating growth.

Danny Vena, CPA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.