Shares of Dell Technologies (DELL -17.87%) were moving higher this week, primarily on reports that Dell had won a substantial percentage of contracts relating to Tesla's AI server buildout.
Additionally, AI stocks were up broadly this week after Alphabet announced new products at its annual developer conference, including adding an AI overview to Google searches. That seemed to stoke another round of investor enthusiasm for AI stocks.
Dell stock finished the week up 14.2%, according to S&P Global Market Intelligence.
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Tesla chooses Dell
The main reason for Dell's surge seemed to be that it won the spoils in Tesla's AI server ramp.
According to multiple Wall Street analysts, Dell was a winner from Tesla's AI server buildout, which is expected to add to its $2.9 billion AI backlog. Evercore ISI estimates that the orders could add $2.5 billion to $3 billion in revenue this year for Dell.
That wouldn't be a major driver for Dell as the company brought in $88.4 billion in revenue last year, but investors are closely watching its position in AI, as that's expected to be a significant driver of demand in the future.
Super Micro Computer has claimed an early lead in the AI server market with its revenue tripling in its most recent quarter, but Dell, which is a much larger business, is likely to benefit from the AI boom as well.
What's next for Dell
Dell hasn't made any announcements about a deal with Tesla so the details are still unclear, but we're likely to learn more when the company reports earnings on May 30.
Analysts expect revenue to rise 6.8% to $21.66 billion and for earnings per share to fall $1.31 to $1.22, reflecting challenges in the PC market.
However, investors will be keeping a close eye on AI-related demand, including from Tesla. That news is likely to move the stock as investors look past the overall results.
