Shares of Dell Technologies jumped 11% in premarket trading after the company projected that revenue from its artificial intelligence server business will double in fiscal 2027, highlighting sustained momentum in AI infrastructure spending.

Trading around $135.17 before the open, Dell is poised for its highest level in more than two months. Investors also welcomed a 20% increase in cash dividends and a newly authorized $10 billion share repurchase program, reinforcing management’s confidence in forward earnings visibility.

AI Servers Drive Revenue Inflection

Dell expects AI server revenue to rise 103% to approximately $50 billion in fiscal 2027. The forecast positions the company among the primary beneficiaries of a global AI infrastructure wave, with hyperscalers and enterprises projected to spend at least $630 billion this year on data centers, chips, and networking equipment.

Unlike chipmakers that dominate headlines, Dell operates as a systems integrator — assembling and deploying AI compute platforms tailored for Tier 2 cloud providers and enterprise customers. This segment has become a powerful earnings driver, offering higher-margin opportunities relative to traditional hardware cycles.

Analysts at J.P. Morgan raised price targets, with projections suggesting potential upside toward $165 over the next year — roughly 36% above its prior close.

Balancing AI Growth with PC Headwinds

While AI servers are accelerating, Dell’s legacy PC business faces cost pressures. Memory chip prices have surged as manufacturers redirect supply toward AI data center components. Research firm TrendForce recently revised first-quarter 2026 DRAM price growth to 90%–95% sequentially, signaling tight supply conditions.

Rising memory costs could particularly pressure Dell’s gaming PC segment, where performance hinges on high-speed DRAM. However, Dell has demonstrated stronger cost management than competitors such as HP Inc. and Lenovo Group, helping preserve margin stability.

The ability to offset cyclical PC softness with AI server strength underscores a broader strategic pivot.

Capital Returns Signal Confidence

The 20% dividend hike and $10 billion buyback authorization amplify the bullish narrative. In capital-intensive hardware markets, robust cash returns often signal management’s conviction in durable earnings growth.

Dell’s stock has significantly outperformed HP and Lenovo over the past year, reflecting investor preference for companies most directly exposed to AI infrastructure scaling.

Looking ahead, the sustainability of AI capital expenditures will remain the central debate. If enterprise AI deployment broadens beyond hyperscalers, Dell’s systems-level positioning could offer continued revenue leverage. Conversely, any slowdown in AI investment could test the durability of the current rally.

For now, the market is rewarding Dell’s blend of AI-driven growth and shareholder-friendly capital allocation.