Dell Technologies Inc. shares rallied around 7% on Thursday, energized by the announcement that one of its business units secured a massive $9.7 billion defense contract from the Pentagon, just hours before the hardware manufacturer’s first quarter financial results.
The tech giant is slated to release its fiscal first quarter earnings report on Thursday, May 28, immediately following the closing bell.
At 12:19 p.m. EDT, Dell shares surged 6.70%, or $20.46, to trade at $325.78.
This high-stakes earnings release lands during a period of intense market enthusiasm for technology equities, driven primarily by the ongoing artificial intelligence boom. Dell has been a premier beneficiary of this AI-driven market frenzy, witnessing its stock price skyrocket by more than 140% since the beginning of the year.
Investors are looking for a repeat performance of Dell’s previous earnings report on February 26, which triggered a massive 22% single-day stock surge.
For the full year, Dell recorded an unprecedented $113.5 billion in total revenue. Since that milestone, the equity has consistently extended its upward trajectory, sustained by intense market speculation surrounding its future growth potential.
Dell wrapped up its fiscal 2026 with a historic $43 billion backlog specifically for AI-optimized server orders, carved out of $64 billion in total commitments. Wall Street aggressively capitalized on this metric, interpreting it as concrete proof of Dell’s ability to capture major slices of corporate AI infrastructure spending.
For the upcoming first quarter report, consensus Wall Street estimates point to an earnings per share (EPS) of $2.96 on total revenue of $35.74 billion. This marks a substantial year-over-year leap from the same quarter last year, when Dell delivered an EPS of $1.55 on $23.38 billion in revenue.
Aside from top-line revenue, market analysts are zeroing in on operating margins. As Dell’s volume of AI servers continues to scale up, the critical question is whether the company can aggressively expand its market share without eroding its profitability margins.
In its previous guidance, Dell Technologies projected its fiscal 2027 first quarter revenue to land between $34.7 billion and $35.7 billion, with AI-specific server sales expected to contribute roughly $13 billion to that total.
The Pentagon Deal
A subsidiary of Dell Technologies Inc. has secured a massive $9.7 billion contract from the Pentagon to streamline the US military’s corporate licensing for Microsoft Corp. software. The deal encompasses essential office tools for email, spreadsheets, and other operational requirements across both classified and unclassified networks.
Dell Federal Systems emerged victorious over a field of several rival bidders for the five-year agreement, Pentagon Chief Information Officer Kirsten Davies said on Wednesday.
According to Davies, the centralized arrangement is projected to yield an annual cost reduction of $422 million for the Department of Defense.
The contract “will streamline and consolidate critical Microsoft software and services across the Department of War, the intelligence community, and the US Coast Guard,” she said.
The Dell contract “provides a singular place to provide the licenses we need to run our Microsoft systems and eliminates a lot of redundancy,” said Acting Navy Chief Information Officer Barry Tanner.
“The point of this agreement was to consolidate and gain the efficiencies on what we are already purchasing,” he said.
