Dell Technologies Inc. has provided an annual sales outlook that significantly surpasses analyst expectations, driven by robust demand for artificial intelligence (AI) servers.

The Texas-based company stated on Thursday that revenue for the fiscal year ending in January 2027 is projected to be approximately $167 billion, with $60 billion coming from AI server sales. This forecast exceeds the previous revenue outlook of about $140 billion and also surpasses the average analyst estimate of $142.1 billion, as compiled by Bloomberg.

Chief Operating Officer Jeff Clarke noted in the statement that for the quarter ended May 1, the company secured $24.4 billion in AI orders and achieved $16.1 billion in AI server sales. "The AI opportunity shows no signs of slowing down," he said.

Dell's server business has been recognized as a winner in the AI sector this year, contributing to a stock price increase of over 150% as of Thursday's market close.

First-quarter sales surged by 88% to $43.8 billion, compared to the average analyst estimate of $35.5 billion. In addition to AI-focused products, performance was also bolstered by demand for traditional servers equipped with central processing units. Revenue for this division nearly doubled year-over-year to $8.5 billion.

Amid rapidly rising prices for memory chips, the hardware company has been focused on controlling costs and improving profit margins. Excluding certain items, earnings per share for the quarter were $4.86, exceeding the average analyst estimate of $2.99.

On Wednesday, the U.S. military announced it would award Dell a $9.7 billion contract to assist with Microsoft software licensing. Evercore ISI analyst Amit Daryanani wrote that this deal "provides Dell with a source of growth diversification beyond AI and enterprise business."

Revenue for Dell's business unit, which includes personal computers, increased by 17% to $14.6 billion, primarily driven by sales to enterprises. The average analyst expectation for sales in this segment was $12.9 billion.