Dell Technologies reported strong fiscal second-quarter results, exceeding Wall Street expectations, fueled by an 80% increase in server sales. The company’s stock rose more than 3% in extended trading following the announcement.

For the quarter, Dell posted revenue of $25.06 billion, surpassing the expected $24.53 billion, while adjusted earnings per share (EPS) reached $1.89, outpacing the forecasted $1.71. Net income surged 85% to $841 million, or $1.17 per share, compared to $455 million, or 63 cents per share, in the same period last year. Revenue grew by 9% from $22.93 billion year-over-year.

Dell’s performance was bolstered by its Infrastructure Solutions Group (ISG), which includes servers and networking systems tailored for artificial intelligence (AI) workloads. The ISG unit saw a 38% increase in sales, generating $11.65 billion, beating expectations of $10.44 billion. Servers and Networking revenue, a key driver within ISG, soared 80% annually to $7.76 billion, significantly exceeding the anticipated $6.37 billion. Notably, AI server sales contributed $3.1 billion to this figure, up from $1.7 billion in the previous quarter.

Jeff Clarke, Dell’s Chief Operating Officer, highlighted the company’s success in securing substantial AI deployments, noting a growing backlog of $3.8 billion in AI server orders and a multibillion-dollar pipeline of pending deals with enterprises and cloud providers.

However, Dell’s storage business within ISG experienced a 5% decline, bringing in $4 billion in sales. Additionally, the Client Solutions Group, responsible for PCs and laptops, reported a 4% annual decline in revenue to $12.41 billion, with consumer sales dropping 22%.

Despite these challenges, Dell raised its full-year revenue guidance slightly, reflecting its confidence in continued growth driven by AI-related demand. The company also allocated $1 billion for share repurchases and dividends during the quarter.