Dell Technologies reported a dramatic surge in its AI-optimized server business, generating $9.0 billion in revenue during the fourth quarter of fiscal 2026—a more than threefold increase. This explosive growth contributed to a 39% year-over-year jump in total Q4 revenue, reaching $33.4 billion, and helped drive full-year revenue to a record $113.5 billion, up 19%.
The company's AI pipeline has swelled to unprecedented levels, with a backlog entering fiscal 2027 standing at $43 billion and cumulative orders surpassing $64 billion. Shipments of AI-optimized servers have already exceeded $25 billion. Based on this momentum, Dell issued a bold forecast, projecting AI server revenue to reach approximately $50 billion for the fiscal year ending January 2027.
Despite the stellar top-line performance, Dell's stock initially fell 1.64% to $121.45 in the regular session before rocketing 10.95% to $134.75 in after-hours trading following the earnings release. Investors grappled with margin pressures, particularly from soaring memory chip costs. Spot prices for DRAM have increased up to 5.5 times over the past six months, while NAND flash prices surged up to fourfold.
To protect profitability, Dell implemented pricing resets across its server portfolio in December and updated tens of thousands of PC quotes in early January, while also shortening quote validity periods. The company's Infrastructure Solutions Group, which includes servers, posted a strong 14.8% operating margin for the quarter, though the AI server business itself operates at thinner mid-single-digit margins.
Looking ahead, Dell provided strong guidance for fiscal 2027, targeting revenue of $140 billion at the midpoint and anticipating continued margin gains. The company also boosted shareholder returns, having returned $7.5 billion during the year through share repurchases and approving a 20% dividend increase.
