For the past year or more, the best way to bet on artificial intelligence has been chipmakers. But the market is sending a clear signal: massive capital expenditure is now spilling over from semiconductors into the servers that house those chips and the software that puts the computing power to work. Dell Technologies (DELL) surged 33% on Friday, its biggest one-day gain since returning to public markets, igniting a rally across AI infrastructure-related stocks. Here are three representative companies benefiting from this broadening trend.
Dell Technologies: AI server revenue soars 757%, raises full-year guidance
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Dell reported fiscal first-quarter 2027 results for the period ended May 1, 2026, with revenue jumping 88% year over year to a record $43.8 billion, a sharp acceleration of 39% from the previous quarter. Even the traditional, non-AI server and networking business grew 92%. Adjusted earnings per share rose 214%.
Management raised full-year revenue guidance to $165−169 billion and lifted its AI server revenue target to $60 billion. Dell vice chairman and chief operating officer Jeff Clarke said on the earnings call: “Our pipeline indicates demand is not slowing, but accelerating.” At the current share price of around $421, Dell trades at a forward price-to-earnings ratio of approximately 24 times, which looks reasonable given the growth trajectory.
Hewlett Packard Enterprise: Sympathy rally ahead of its own report
As Dell’s main rival in enterprise servers, Hewlett Packard Enterprise (HPE) did not release any earnings last week, but its shares still jumped about 13% to a new high, reflecting strong market expectations for its fiscal second-quarter report due Monday. In its fiscal first quarter ended January 31, 2026, HPE’s revenue rose 18% to $9.3 billion, with its net working business super charged by the Juniper Networks acquisition. At around $43 per share, HPE trades at about 18 times its full-year adjusted earnings outlook – cheaper than Dell – a discount that likely mainly reflects its relatively smaller AI server business.
ServiceNow: AI is not disrupting software but becoming a growth engine
If Dell and HPE demonstrate AI spending moving into hardware, ServiceNow (NOW) represents the same logic on the software side. The workflow automation company rose about 14% on Friday, as beaten-down software names rallied. The stock had been hit hard this year on fears that AI would erode demand for enterprise software.
However, the company’s fundamentals defy the fear. First-quarter subscription revenue rose 22% year over year to $3.7 billion, and its AI suite, Now Assist, is on track to reach $1.5 billion in annual contract value this year (up from a previous $1 billion target). Customers with over $1 million in annual contract value for Now Assist grew more than 130% year over year – a sign that AI is expanding ServiceNow’s business rather than cannibalizing it. That said, valuation remains demanding. Even after this year’s steep sell-off, the stock still trades at a mid-30s price-to-earnings multiple on adjusted earnings.
The downstream effect of hyperscaler spending
In 2027, major cloud providers are expected to spend more than $700 billion on AI infrastructure. That money starts with chips, but it doesn’t stop there. Today, a significant portion is flowing into the servers assembled by Dell and HPE, and the software that turns raw computing power into productive work. Friday’s market action was a real-time validation of this transmission logic. However, chasing the day’s pops carries risks: hardware names have thin margins and are tied to a capex cycle that won’t last forever, while ServiceNow, despite its higher-quality software business, still commands a steep valuation premium. Investors positioning for the next phase of AI need to see the trend clearly while balancing the risks.
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