The Grey Box Shifter, Dell, has made the cocaine nose jobs of Wall Street grin manically after AI server demand went bananas.
According to Yahoo Finance, Dell Technologies shares surged after the server maker posted quarterly results that beat expectations and signalled record AI demand.
The company reported fiscal second-quarter revenue of $46.97 billion, up 58 per cent year on year and ahead of forecasts of $44.92 billion. Adjusted earnings per share came in at $7.04, well above the expected $4.92.
The numbers were powered by AI server demand, which has turned into a rather useful money hose. The Grey Box Shifter, Dell, lifted its annual revenue forecast by $25 billion and raised its profit outlook for the second time this year.
Its FY27 revenue outlook now stands at $192 billion, up from $167 billion, implying about 69 per cent year-on-year growth. AI-optimised server revenue hit $16.4 billion, while the AI server outlook sits at $74 billion for the year.
TD Cowen analyst Krish Sankar still decided not to join the stampede. On 2 September 2026, Sankar lifted his price target on the stock to $500 from $450 but kept a hold rating. That might sound a bit miserly after calling the results “phenomenal”, but TD Cowen appears wary of how much investors should pay for the growth spurt. There is only so long traders can shout AI before someone asks about margins.
Sankar said traditional server upgrades and early demand for CPUs could provide another leg of growth. Storage expansion and PC share gains may give the outfit more support, provided the market does not suddenly remember it hates hardware cycles.
Component cost inflation remains the gremlin in the server room. TD Cowen said the pressure has not hit prices yet because Dell, has operating and cost efficiencies, but that may not last.
If component costs keep rising, the company may have to pass them on or swallow weaker margins. That is the sort of choice finance departments dress up in spreadsheets before quietly reaching for the headache tablets.
“We value Dell on a SOTP method, assigning an 18x multiple (was 25x) to the ISG group and 10x to CSG. The blended 16x multiple (was 21x) applied to our FY28 EPS estimate of $31.00 (was $21.50) yields our $500 price target (was $450).”
Hedge funds have been edging further in, with 77 funds holding the stock at the end of the second quarter, up from 72 in the previous quarter. For now, Dell has AI servers, traditional servers, storage and PCs all trying to pull in the same direction.
