Dell (DELL) is just revving up after an eye-popping quarter.

The news: Goldman Sachs analyst Katherine Murphy reiterated a Buy rating on Dell in a note on Tuesday. Murphy set the price target at $500, implying about 15% more upside from current trading levels.

Murphy points to three factors as likely further drivers of Dell’s already hot stock price:

• Enterprise IT hardware spend is growing as companies race to upgrade infrastructure to support AI initiatives.

• Dell’s strong fiscal year 2027 outlook is constrained by supply, not demand. That is often a combination for strong profit margins.

• Dell’s operating margin outperformance demonstrates the benefits of the company’s scale and supply chain.

The analysis: Dell said last Thursday evening it sees $167 billion in fiscal year 2027 revenue, including a staggering $60 billion from AI server sales. That’s up sharply from a prior outlook of about $140 billion and blew past analysts’ average estimate of $142.1 billion.

The numbers from the most recent quarter were almost hard to believe as well.

First quarter sales surged 88% to $43.8 billion against analyst estimates of $35.5 billion. The company booked $24.4 billion in AI orders in a single quarter and ended the period sitting on a backlog of $51.3 billion in AI server orders.

“This is what an AI supercycle looks like,” Evercore ISI analyst Amit Daryanani wrote in a note.

The stock finished Friday’s session up a sizzling 32.8%. The stock rose another 10.7% on Monday and is up 2.5% in premarket trading today.

AlphaSpace intel: It’s not too hard to find the impact of the AI boom on Dell’s financials. The company’s sales have grown by a double-digit percentage year over year for the past four quarters, according to AlphaSpace data.

Bottom line: Dell stock may keep rising. Not only was its quarter and guidance rock-solid, but rival Hewlett Packard Enterprise also delivered bullish results and an upbeat outlook to match.

Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.

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