Shares of Dell Technologies (NYSE:Dell) surged around 33% on Friday, registering the best single-day performance in its history, following the release of its first-quarter fiscal report for 2027 (covering the period up to May 1, 2026).
This rise wasn’t just beneficial for Dell’s shareholders; it also highlighted a broader trend among stocks connected to artificial intelligence (AI) infrastructure, ranging from server production to enterprise software. For quite some time, investing in chip manufacturers was deemed the best way to capitalize on AI progress. But Friday’s surge reminded us that the investments in chips need to be complemented by the servers that host them, as well as the software that makes everything function.
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Here’s a glance at three companies involved in this expansion.
Dell Technologies
In its first fiscal quarter, Dell reported an impressive 88% year-over-year increase in sales, totaling $43.8 billion— an all-time high. This growth rate was the highest since the company re-entered public markets in 2018, up from 39% in the previous quarter. Revenue was driven by AI-optimized servers, which saw a substantial rise, hitting $16.1 billion, a whopping 757% growth.
But it wasn’t just AI products that contributed. Dell’s Infrastructure Solutions group, encompassing data center hardware, climbed 181% to $29 billion, while the traditional server and networking business (not connected to AI) still experienced a notable 92% growth. Moreover, non-GAAP (adjusted) earnings per share climbed 214%.
Furthermore, the management team raised its revenue forecast for the year from $165 billion to $169 billion, along with increasing the target for AI server revenue to $60 billion.
“Our pipeline indicates that demand is ramping up, not declining,” stated Jeff Clark, Dell’s vice chairman and COO, during the earnings call for the first quarter.
Currently priced around $421, the stock has risen about 234% during 2026, trading at approximately 24 times the management’s adjusted earnings estimates for the year—an impressive multiple considering its rapid growth.
Hewlett Packard Enterprise
Hewlett Packard Enterprise (NYSE:HPE), Dell’s main competitor in the enterprise server market, didn’t release any news on Friday. Yet, its stock rose about 13% to reach a new high, with the company set to unveil its own fiscal second quarter report on Monday.
In a recent quarter (fiscal Q1 ending January 31, 2026), HPE’s revenue increased by 18%, reaching $9.3 billion. Its networking sector, bolstered by the Juniper Networks acquisition, grew an impressive 151.5%, accounting for over half of HPE’s profits. The company anticipates second-quarter sales between $9.6 billion and $10 billion.
HPE’s stock trades at around $43, roughly 18 times the projected full-year adjusted earnings, making it more affordable than Dell. This difference is thought to stem mainly from HPE’s smaller AI server segment.
ServiceNow
While Dell and HPE emphasize AI investment in hardware, ServiceNow (New York Stock Exchange: Current) focuses on the software aspect of this trend.
Workflow automation companies saw a 14% rise on Friday, benefiting from a rebound among lagging software organizations. ServiceNow has faced challenges this year due to worries that AI could diminish demand for enterprise software. Despite climbing to around $124, the stock remains approximately 40% below its peak from the last year, with its market value dropping significantly from about $233 billion to roughly $128 billion at the time of writing.
However, the company’s results tell a contradictory story to fears of disruption. Subscription revenue rose 22% year-over-year to $3.7 billion in the first quarter. The Now Assist AI suite is projected to reach annual subscriptions of between $1 billion and $1.5 billion. Notably, customers with yearly commitments exceeding $1 million have increased by over 130% year over year, suggesting that AI is fostering ServiceNow’s growth rather than hindering it.
Yet, the valuation remains an issue. Even with this year’s downturn and the recent stock recovery, ServiceNow trades at a price-to-earnings ratio in the mid-30s based on adjusted earnings.
Downstream impact of hyperscaler spending
It is increasingly evident that the significant financial investments by hyperscalers are impacting other sectors as well. This year, top cloud providers are expected to spend over $700 billion on AI infrastructure. While that money originates from the chip tier, it eventually makes its way to the servers that companies like Dell and HPE build and into the software that translates raw computing into actionable insights. Friday’s market activity reflected this connection.
However, attempting to chase after Friday’s stock surge comes with its own risks. The lower valuations of hardware companies highlight concerns over slim profit margins and the cyclical nature of spending patterns, which may not endure. Conversely, ServiceNow’s robust software business justifies a higher valuation.
Should you buy Dell Technologies stock now?
Before considering an investment in Dell Technologies, it’s crucial to weigh a few points:
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*Stock Advisor will return on May 31, 2026.
Moreover, the person mentioned, Daniel Sparks and their client currently hold no positions in any mentioned stocks. The Motley Fool actively recommends Hewlett Packard Enterprise and ServiceNow. The Motley Fool maintains a disclosure policy.
