By Dina Bass

(Bloomberg) — Dell Technologies Inc. (DELL) shares jumped in early trading after the company gave an outlook for sales of its artificial intelligence servers that exceeded estimates, a sign of robust demand for machines helping fuel the AI data center build-out.

The company will generate about $50 billion in AI server revenue in the current fiscal year, which ends in January 2027, Dell said Thursday in a statement.

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“The AI opportunity is transforming our company,” Chief Operating Officer Jeff Clarke said in the statement. Dell enters the year “with a record backlog of $43 billion — powerful proof that our engineering leadership and differentiated AI solutions are winning,” he said.

Dell’s servers designed to run AI workloads are attracting customers from companies that rent computing power like CoreWeave Inc. (CRWV) and Nscale Global Holdings Ltd., as well as corporate clients and major AI providers. The Texas-based company has been working to hold down costs and improve margins even as prices for memory chips rise rapidly.

In the fiscal fourth quarter, Dell reported an operating margin of 14.8% for its server and networking unit, compared with an average estimate of 12.9%. In its computer unit, the margin was 4.7%. Analysts, on average, projected 6.18%.

“Across the industry, the environment remains highly dynamic, with unprecedented AI demand creating sustained supply tightness and frequent pricing resets,” Clarke said in prepared remarks, referring to the memory chip issue.

The shares gained about 10% in early trading before markets opened in New York. The stock has increased 13% in the past 12 months.

Earnings, excluding some items, will be about $12.90 a share in the current fiscal year, Dell said in the statement. Sales will be about $140 billion. Analysts, on average, projected profit of $11.56 a share on revenue of $126.3 billion.

The company also announced a $10 billion increase in its share buyback program.

In the quarter, total sales increased 39% to $33.4 billion, compared with the average estimate of $31.7 billion. Profit, excluding some items, was $3.89 a share. Analysts, on average, projected $3.52.