Shares of Dell Technologies experienced a remarkable surge of approximately 33% on Friday, marking the company's most significant single-day increase ever after announcing robust results for its fiscal first quarter of 2027, which concluded on May 1, 2026.
This rise not only benefited Dell's investors but also positively influenced a range of stocks connected to artificial intelligence (AI) infrastructure, encompassing everything from server manufacturers to enterprise software providers. Over the past year, the most reliable way to invest in AI expansion has been through chipmakers. However, Friday's market movements reminded investors that the capital allocated to these chips inevitably flows into the servers that support them and the software that utilizes that computational power.
Let’s explore three companies benefiting from this expanding landscape.
Dell Technologies
Dell's fiscal first-quarter revenues surged by an impressive 88% year-over-year, reaching a historic $43.8 billion—its fastest growth rate since going public again in 2018, and a notable increase from 39% in the previous quarter. The primary driver was their line of AI-optimized servers, which saw revenues skyrocket by 757%, totaling $16.1 billion.
The strength of Dell's performance extended beyond AI-focused products. The infrastructure solutions division, which includes data center hardware, witnessed a staggering 181% growth to $29 billion. Even traditional non-AI server and networking sales experienced a 92% increase. Furthermore, their non-GAAP earnings per share rose by 214%.
Management has adjusted its full-year revenue projections to between $165 billion and $169 billion while boosting its AI server revenue target to $60 billion. Jeff Clarke, Dell's vice chairman and chief operating officer, indicated during the earnings call that the demand is not just steady but actually increasing.
Currently trading at around $421 and up roughly 234% for 2026, Dell’s shares are priced at about 24 times the company's full-year adjusted earnings forecast—considered a fair valuation given its rapid growth.
Hewlett Packard Enterprise
Hewlett Packard Enterprise (HPE), Dell’s main competitor in the enterprise server sector, experienced a 13% increase on Friday without releasing any news of its own, as it prepares for its fiscal second-quarter report on Monday.
In its most recent quarter—fiscal Q1 ending January 31, 2026—HPE reported an 18% increase in revenue, reaching $9.3 billion, with its networking segment, bolstered by the acquisition of Juniper Networks, surging by 151.5%. This segment now contributes significantly to HPE’s profitability. The company anticipates fiscal second-quarter revenue between $9.6 billion and $10 billion.
At approximately $43 per share, HPE trades at around 18 times its adjusted earnings outlook, which is lower than Dell’s multiples, likely reflecting its smaller footprint in the AI server market.
ServiceNow
In contrast to Dell and HPE’s focus on hardware, ServiceNow (NOW) symbolizes the software aspect of the AI investment narrative. The workflow automation firm saw its shares rise by around 14% on Friday as the broader software sector rallied. Despite a challenging year marked by fears that AI might diminish demand for enterprise software, ServiceNow’s recent spike brought its stock to about $124—still approximately 40% below its previous 52-week peak, resulting in a market value decline from nearly $233 billion to roughly $128 billion.
However, the company’s financials indicate a different story. ServiceNow's first-quarter subscription revenue climbed 22% year-over-year to $3.7 billion, with its AI offering, Now Assist, projecting a potential annual contract value of $1.5 billion, up from an earlier target of $1 billion. Notably, the number of clients spending over $1 million annually on Now Assist has grown by over 130% year-over-year, indicating that AI adoption is enhancing ServiceNow's business rather than threatening it.
Nevertheless, valuation remains a concern, as even following the stock’s recent rebound, ServiceNow trades at a price-to-earnings ratio in the mid-30s based on adjusted earnings.
Wider Implications of Hyperscaler Investments
The implications of extensive spending by hyperscalers are becoming increasingly apparent, as funds are expected to exceed $700 billion for AI infrastructure in 2027. While the initial investment may start with chips, it doesn’t end there; substantial funds are now being funneled into the servers produced by companies like Dell and HPE, along with the software necessary for transforming raw computational power into actionable tasks. Friday’s market activity highlighted this interconnected ecosystem.
However, investors should tread carefully. The hardware firms are less expensive for a reason—thin profit margins and the cyclical nature of spending, which isn't permanent. On the other hand, ServiceNow's higher-quality software business demands a significant valuation premium, suggesting that while opportunities abound, caution is warranted.
