Updated with Friday stock price:

Data center hardware and personal computer maker Dell Technologies Inc. easily beat Wall Street’s expectations today as it posted its latest financial results, benefiting from surging artificial intelligence demand.

The company reported fourth-quarter earnings before certain costs such as stock compensation of $3.89 per share on sales of $33.38 billion, up by a staggering 39% from the same period one year earlier. Wall Street analysts had been looking for earnings of just $3.53 per share on much lower sales of just $31.67 billion.

Dell’s profitability increased commensurately with its revenue. It posted net income of $2.26 billion in the quarter, rising from a $1.53 billion profit in the year-ago period.

Over the last few years, Dell has leveraged its close relationship with the chipmaker Nvidia Corp. to become one of the world’s top sellers of data center servers and networking gear used by enterprises to power their AI projects. Demand for that hardware has surged, and Dell has become one of the most reliable suppliers of AI servers at a time when Nvidia’s powerful graphics processing units are in short supply.

During the quarter, Dell banked more than $8.95 billion worth of sales of AI-optimized servers, up a stunning 342% from the year before. Its total servers and networking revenue came in at $14.8 billion, well ahead of the Street’s consensus estimate of $13.9 billion. Overall, Dell’s infrastructure solutions group generated $19.6 billion in sales, while its client solutions group, which is focused on PCs, added another $13.49 billion.

Dell Vice Chairman and Chief Operating Officer Jeff Clarke (pictured) said fiscal 2026 was a defining year in the company’s history, during which it delivered record revenue of $113.5 billion. “The AI opportunity is transforming our company,” he said. “We closed more than $64 billion in AI-optimized server orders, shipped more than $25 billion throughout the year, and are entering fiscal 2027 with a record backlog of $43 billion. [This is] powerful proof that our engineering leadership and differentiated AI solutions are winning.”

Even more encouraging is that Dell is seeing demand rise across multiple customer types, including hyperscalers, large enterprises and government customers. Clarke said on a conference call with analysts that its AI server customer base now surpasses 4,000 clients.

Dell doesn’t expect to slow down anytime soon. For the first quarter, it’s looking for earnings of about $2.90 per share at the midpoint of its guidance range, with revenue of between $34.7 billion and $35.7 billion. That’s well ahead of the Street’s consensus, which calls for earnings of just $2.34 per share on sales of about $29 billion.

For the full year, Dell is aiming for a $12.90 per share profit on sales of between $138 billion and $142 billion. Wall Street is looking for just $11.45 per share on $124.7 billion in revenue.

Not surprisingly, the market reacted positively to Dell’s bullish forecast. The company’s stock rose more than 11% in the after-hours trading session. The stock is down 3% in the year to date. Update: On Friday, shares rocketed up 22%.

Dave Vellante, founder and chief analyst of SiliconANGLE Media’s sister organization theCUBE Research, said Dell had a blowout quarter, with both AI servers and traditional systems in strong demand. “Positives were server growth, margin expansion, free cash flow growth, strong guidance and returns of capital to shareholders,” he said. “Dell’s balance sheet keeps getting stronger and the company is riding the AI infra wave to new heights.”

The analyst noted the almost symbiotic relationship between Dell and Nvidia, with the company’s fortunes mirroring those of the chipmaker since becoming one of the premier channels for GPUs. But Nvidia’s earnings results this week had a much more muted reception from shareholders. “Dell seems to have a formula that is breaking through the negative sentiment,” Vellante said.

One secret may be the way Dell has handled the rising memory chip costs that have plagued the rest of the technology industry. Demand for memory components has outpaced the available supply due to the rise in AI server sales, putting pressure on tech hardware manufacturers and their margins.

However, Dell’s gross margins were 20.5% in the quarter, higher than the 20.3% that analysts had expected.

Clarke told analysts that the supply environment remains extremely dynamic, with unprecedented AI demand resulting in frequent pricing resets. But he said the company is “managing this environment in real time, applying lessons learned from prior cycles to improve resilience” and strengthen its position.

Constellation Research analyst Holger Mueller said few people would have believed just a couple of years ago that Dell would still be growing at almost 40% in late 2025. “Those who did believe will be reaping the rewards, for that is what Dell has delivered,” he said. “Even the client solutions business is looking up, and it’s all thanks to AI. Michael Dell and his team deserve a lot of credit for getting Dell to the top of the AI server pile, but they’ll be under pressure to keep the party going.”

Photo: SiliconANGLE