TLDR
- Dell raised its full-year revenue forecast by $25 billion after reporting record quarterly revenue of $47 billion
- Dell’s AI server backlog hit nearly $95 billion, with $60 billion in new orders this quarter
- GitLab shares rose up to 15% after revenue grew 21% and bookings hit a record
- Credo Technology fell around 20% despite 115% revenue growth as margin concerns spooked investors
- Palo Alto Networks dropped roughly 9-11% despite beating earnings, dragging cybersecurity stocks lower
Wall Street snapped a three-day losing streak on Wednesday, driven by strong results from Dell Technologies and GitLab.
The Dow rose about 0.6%, while the S&P 500 and Nasdaq each gained around 0.5%. Nvidia climbed 4-5%, helped by Dell’s blowout AI server numbers.
But not every tech stock shared in the gains. Credo Technology and Palo Alto Networks both fell sharply, showing investors are quick to punish any sign of slowing momentum.
Dell’s AI Server Business Drives Record Numbers
Dell Technologies was the big story of the day. The company reported second-quarter revenue of $47 billion, up 58% from a year ago, beating Wall Street expectations by a wide margin.
Dell raised its full-year revenue outlook by $25 billion, lifting the forecast to around $192 billion. Adjusted earnings per share guidance was raised to $25.50.
The AI server business is driving much of that growth. Dell received around $60 billion in AI server orders during the quarter and ended with a backlog of nearly $95 billion.
Dell shares jumped as much as 11% on the news. The results also lifted Nvidia, since Dell’s AI servers rely heavily on Nvidia chips.
GitLab Climbs as AI Disruption Fears Cool
GitLab shares rose between 12% and 15% after the company posted better-than-expected quarterly results.
Revenue came in at $286.3 million, up 21% year over year. The company also reported record gross bookings and net annual recurring revenue growth above 40%.
Investors had been watching GitLab closely. There has been debate all year about whether AI tools will reduce demand for software development platforms.
CEO Bill Staples pushed back on that idea. He said more AI-generated code actually increases the need for security, governance and orchestration tools.
The results gave investors a reason to feel better about software companies facing AI competition.
Credo and Palo Alto Pull Back Despite Strong Numbers
Credo Technology reported revenue of $479 million, up 115% from a year ago. Adjusted earnings per share came in at $1.20. It was the company’s seventh straight quarter of triple-digit revenue growth.
Despite all that, shares fell around 20%. Investors focused on the gross margin figure, which slipped to 68%, with guidance of 67% to 69% next quarter.
The selloff shows how much pressure high-growth AI stocks are under. Even triple-digit growth is not enough if the numbers fall short of elevated expectations.
Palo Alto Networks dropped around 9-11%, even though it beat earnings estimates. The company also announced the acquisition of AI security platform Console.
The selloff in Palo Alto added pressure to cybersecurity and software stocks more broadly.
Markets still face headwinds. The 10-year Treasury yield is near 4.8%, oil prices remain high, and some investors are now pricing in another Federal Reserve rate hike.
For now, Dell’s results have given the AI infrastructure story a fresh boost.
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