Dell Ripped 33%. Inflation Still Has the Fed.

GOOD MORNING, Wall Street heads into the weekend at record highs because AI earnings are still doing the heavy lifting. Dell jumped 32.8% after raising its full-year outlook, pulling server and software names higher and helping the S&P 500 log a ninth straight weekly gain. Oil also fell sharply for the week as traders hoped a U.S.-Iran agreement could reopen the Strait of Hormuz. But the macro ceiling has not disappeared: April PCE inflation hit 3.8%, the highest in three years, and Fed officials are still warning that the energy shock could prove persistent. AI is winning the tape. Inflation still controls the discount rate.

MARKETS | TLDR

Wall Street closed at record highs: The Dow rose 0.72%, the S&P 500 gained 0.22% and the Nasdaq added 0.21% on Friday, with all three indexes finishing the week and month higher.
Dell powered the tech rally: Dell surged 32.8% after raising its annual revenue and profit forecasts, while HPE, Super Micro and Microsoft also posted large gains.
Oil logged a steep weekly decline: Brent traded around $92.69 Friday morning and was on track for a weekly drop of more than 10% as investors priced hopes for a Hormuz reopening deal.

DELL

Dell Just Proved the AI Buildout Is Still Accelerating

Dell raised its full-year revenue outlook to $165 billion–$169 billion from $138 billion–$142 billion and lifted adjusted EPS guidance to $17.90 from $12.90. First-quarter revenue jumped 88% to $43.84 billion, with AI infrastructure demand strong enough to push the company’s annual AI-server revenue forecast to about $60 billion.

The more important signal is what Dell’s business has become. AI server revenue reached $16.1 billion in the quarter, surpassing the company’s $14.6 billion PC business. That is not simply a cyclical hardware rebound. It shows how quickly the data-center buildout is changing Dell’s earnings mix and why investors are willing to re-rate a company long treated as a mature PC vendor.

Friday’s 32.8% stock jump pulled HPE, Super Micro and Microsoft higher because the read-through extends across the infrastructure stack. U.S. hyperscalers are expected to spend more than $700 billion on AI infrastructure this year. As long as that capex keeps converting into server orders, suppliers can keep surprising to the upside. The risk is that expectations are rising almost as quickly as revenue.

INFLATION

AI Can Lift Stocks. It Can't Make 3.8% Inflation Disappear.

April PCE inflation rose 3.8% from a year earlier, the fastest pace since May 2023, while core PCE increased 3.3%. At the same time, first-quarter GDP growth was revised down to 1.6% annualized from 2.0%, leaving investors with an uncomfortable combination: slower growth and inflation still well above target.

The immediate market reaction was muted because the inflation numbers were broadly in line with expectations and Friday’s AI earnings news was much stronger. But the policy implication remains restrictive. Kansas City Fed President Jeffrey Schmid warned that the energy shock might not prove temporary, while Fed Vice Chair for Supervision Michelle Bowman said persistently higher inflation could require tighter policy.

That is the tension beneath the record highs. The market can continue to rally if earnings growth stays exceptional, especially in AI. But higher inflation raises the hurdle rate for every future dollar of profit and limits the Fed’s ability to cushion a slowdown. Dell showed why investors still want growth. PCE showed why they may have to keep paying a high discount rate for it.

HEADLINES

Microsoft jumped 5.4% alongside the server rally: The move showed how Dell’s results were read as confirmation of broad AI infrastructure demand rather than a company-specific surprise.
HPE and Super Micro surged 12.6% and 11.6%: Dell’s guidance provided a direct read-through to competing server and infrastructure suppliers.
The S&P 500 posted a ninth consecutive weekly gain: It was the index’s longest winning streak since December 2023, with the S&P up 5.15% in May and the Nasdaq up 8.36%.
Gap plunged 15.4% after cutting its annual sales forecast: The contrast with Dell showed how sharply the market is rewarding AI-linked earnings momentum while punishing weaker consumer demand.
Trump said any Iran deal must reopen Hormuz: The proposed agreement would also require nuclear concessions and removal of sea mines, meaning the oil relief trade still depended on political approval rather than a finalized settlement.

UPCOMING

ISM manufacturing — June 1: The first major June macro release will test whether industrial activity is holding up as inflation remains elevated.
U.S. JOLTS — June 2: Job openings will offer an early read on labor demand before the full payroll report later in the week.
Broadcom earnings — June 4: Broadcom will be one of the next major tests of whether AI chip demand remains strong enough to justify the sector’s rapid valuation recovery.
U.S. payrolls — June 5: The jobs report is the week’s biggest macro catalyst because a resilient labor market could strengthen the case for keeping rates high — or even reopening the door to hikes.

DEEP INSIGTHS

Jobs Report on Tap for Soaring U.S. Stocks

Read this for the market setup behind the record highs. The S&P 500 entered the weekend up more than 10% for the year and on a nine-week winning streak, but investors were already looking toward jobs, bond yields and Broadcom earnings as the next tests of whether AI earnings can keep overpowering rate risk.

Dell’s AI Servers Drive a Stellar Earnings Performance

This is the cleanest company-level read on how the AI boom is changing old hardware businesses. Dell’s AI server revenue surpassed its PC revenue in the quarter, showing that the data-center buildout is not just boosting sales at chipmakers — it is restructuring the earnings mix of the broader enterprise technology stack.