I. Dell
Dell Technologies' stock price is soaring (chart). The company delivered a major beat across the board for its fiscal 2027 second quarter (ended July 31), driven by massive, accelerating demand for AI infrastructure and strong legacy hardware performance. Revenues and earnings rose 58% y/y and 203%, respectively. AI server revenue rose 100%, while traditional servers and networking revenues rose 122%. The results confirm that the AI infrastructure buildout remains in full swing. Strong demand for AI compute capacity points to accelerating AI adoption across the economy, which we think will drive a productivity boom.
II. Productivity
We are already seeing signs of this productivity boom in the economic data. The Atlanta Fed's GDPNow model currently estimates that real GDP is increasing by 4.8% (saar) in Q3, led by a whopping 21.5% increase in AI-supercharged fixed business equipment investment (chart).
Output is booming, while labor input is rising at an anemic pace, a clear sign of robust productivity growth (chart).
