Feb 27 (Reuters) - Shares of Dell Technologies ( DELL ) jumped in premarket trading on Friday after the company forecast revenue from its AI server business will double in fiscal 2027, underscoring surging demand for infrastructure catering to artificial intelligence.

Investors also cheered the PC maker's plans for a 20% hike to cash dividends and an additional $10 billion share repurchase program.

Dell's shares jumped 11% in trading before the bell. Trading at $135.17, it is poised to open at its highest in over two months.

Data center equipment makers such as Dell have benefited from the rapid expansion in AI investors, with sector leaders expected to spend at least $630 billion this year.

Dell said it expects AI server revenue to grow 103% to about $50 billion in fiscal 2027.

At least three Wall Street brokerages raised price targets on the stock, with J.P.Morgan expecting it to rally at least 36%, from its last close, in the next one year to $165.

Dell's ability to navigate cyclical challenges stems from its leadership position in AI compute for Tier 2 Cloud and Enterprises, where the significant revenue inflection is able to provide the company a lot more flexibility in managing operating margin and earnings outcomes, analysts led by Samik Chatterjee at J.P.Morgan wrote in a note.

Dell's other big business, PC manufacturing, is navigating higher memory chip costs, as companies shift resources to building AI data centers.

However, the company has been able to deal with rising prices better than rivals such as HP Inc ( HPQ ) and China's Lenovo Group ( LNVGF ).

The surging costs could hit Dell's gaming PC business as memory processors are essential to videogame systems, enabling quick load times, smooth frame rates and overall performance.

Market researcher TrendForce upwardly revised its first-quarter 2026 Dynamic Random Access Memory price growth rate to 90% to 95% from the previous quarter.

Dell's shares have starkly outperformed those of HP and Lenovo ( LNVGF ) over the past one year.