Dell Lifts Annual Forecasts Again Amid Surging AI Server Demand and Record Results
Dell Technologies' Financial Performance and AI Server Demand
By Jaspreet Singh
Sept 1 (Reuters) - Dell Technologies on Tuesday boosted its annual revenue forecast by $25 billion while also raising its profit outlook for the second time this year, driven by soaring demand for its AI servers.
Dell's shares rose 7% in extended trading.
AI Servers Drive Growth
The servers, equipped with Nvidia's chips, are sought by clients including AI cloud providers Nscale and CoreWeave to build computing clusters for training and running AI models.
Margin Protection Amid Industry Challenges
Dell has also protected its margins from the effects of a memory chip shortage in the industry by hiking prices of its products including personal computers.
Expanding Customer Base
"Demand is broadening across neoclouds, sovereigns, and enterprise customers, and our customer count has surpassed 6,500," Chief Operating Officer Jeff Clarke said on a post-earnings call that was disrupted by a technical issue for about 10 minutes.
"Over the past 12 months, we have booked more than $130 billion in AI server orders," he said.
Industry Context and Investor Confidence
Nvidia's and Super Micro's forecasts last month had bolstered investor confidence in the resilience of the AI boom.
Upgraded Financial Outlook
Revenue and Earnings Forecasts
Dell raised its annual revenue outlook to $192 billion from $167 billion and adjusted earnings per share forecast to $25.50 from its earlier expectations of $17.90.
AI-Optimized Server Projections
The company, whose shares have more than tripled this year, now expects fiscal 2027 revenue for AI-optimized servers to be $74 billion, up from its prior projection of $60 billion.
Record-Setting Quarterly Results
Its second-quarter revenue rose 58% to a record $47 billion, exceeding an LSEG-compiled estimate of $44.92 billion. Adjusted earnings of $7.04 per share topped estimates of $4.91.
Segment Performance
PC Segment Growth
Sales at Dell's PC segment rose 20%, driven by commercial clients, echoing growth at HP. Clarke said the PC unit's revenue is growing at its fastest rate in five years.
Storage, Software, and Server Unit Performance
Revenue from Dell's unit that includes its storage, software and server offerings jumped 89%. Sales from traditional servers and networking more than doubled as customers upgraded infrastructure and demand rose for CPU-based servers handling agentic workloads.
Reporting and Editing
(Reporting by Jaspreet Singh in Bengaluru; Editing by Sahal Muhammed)