Dell Technologies shares advanced about 9% in pre-market trading on Wednesday after the company delivered second-quarter results that substantially exceeded expectations and raised its full-year outlook on the back of surging demand for artificial intelligence servers.

The stock had closed the prior regular session near $425, down roughly 7% after an intraday swing of more than 40 points that saw shares trade as high as $462.83. After-hours trading reversed much of that decline, with the shares rising 8% to 10% as investors digested the numbers. By Wednesday morning the stock was changing hands near $463.

Strong Second-Quarter Results

For the fiscal second quarter ended in July, Dell reported revenue of $46.97 billion, an increase of nearly 58% from a year earlier. Adjusted earnings reached $7.04 per share, well above the approximately $4.90 analysts had anticipated. Net income climbed to $4.13 billion from $1.16 billion in the year-ago period.

The Infrastructure Solutions Group generated $31.8 billion in revenue, up 89%. Within that unit, AI-optimized server sales doubled to $16.4 billion. Traditional servers and networking rose 122%, while storage advanced 26%. Client Solutions revenue, which includes personal computers, increased 20% to $15.0 billion.

Operating income in the infrastructure business jumped 225% to $4.78 billion, with the operating margin expanding to 15% from 8.8% a year earlier.

Record AI Orders and Backlog

Dell booked $60.9 billion in AI server orders during the quarter and finished the period with a record $95 billion backlog, up from $51.3 billion three months earlier. The company said its AI infrastructure customer base has grown beyond 6,500, with roughly 3,300 customers added over the past three quarters. Over the trailing twelve months, Dell converted $131.7 billion of AI demand into orders.

Management raised its fiscal 2027 guidance for a second consecutive quarter. Full-year revenue is now expected at approximately $192 billion, up from the prior outlook of $167 billion. Adjusted earnings per share guidance was lifted to $25.50 from $17.90. AI-optimized server revenue is projected at $74 billion, compared with the earlier $60 billion target.

For the current third quarter, Dell anticipates revenue of about $49 billion and adjusted earnings of $6.50 per share.

Wall Street Response and Valuation

Several research firms increased their price targets following the results. Melius Research raised its target to a Street high of $735. Bank of America and Mizuho lifted their targets to $600, Raymond James moved to $617, and Evercore ISI increased its target to $575. Morgan Stanley raised its target to $499 while remaining more cautious.

At recent levels near $461, the $735 target implies substantial additional upside. The stock now trades at roughly 18 times forward earnings, a premium to some hardware peers, as investors price in continued AI-related growth.

Component supply constraints, including memory and processors, remain a focus for the market. Rising memory costs have already affected pricing in parts of the AI server market. Dell’s large backlog positions the company to convert demand into shipments, though the pace of that conversion will be closely watched in coming quarters.

The board also declared a quarterly dividend of $0.63 per share, payable October 30 to shareholders of record on October 20.