Dell Lifts 2027 Forecasts as AI Server Demand Drives Record Results
AI Server Demand Propels Dell's Financial Performance
By Jaspreet Singh
Boosted Revenue and Profit Forecasts
Sept 1 (Reuters) - Dell Technologies on Tuesday boosted its annual revenue and profit forecasts for the second time this year, driven by soaring demand for its AI servers from technology companies pouring billions into data centers.
Shares of the Round Rock, Texas-based company rose around 8% in extended trading.
Key Suppliers and Industry Impact
AI-Optimized Servers and Cloud Providers
Dell, along with smaller rival Super Micro Computer, is a key supplier of AI-optimized servers that are used by AI cloud providers such as Nscale and CoreWeave for building computing clusters.
Nvidia's Role in AI Server Technology
Those servers are equipped with Nvidia's cutting-edge chips that provide the computing power essential for training and running AI models like OpenAI's ChatGPT.
Market Confidence and Industry Projections
Nvidia's and Super Micro's strong forecasts last month had bolstered investor confidence in the resilience of the AI boom. S&P Global Ratings projected that AI infrastructure spending would surpass $1.3 trillion by 2027, signaling further demand for AI equipment makers.
Dell's Upgraded Financial Outlook
Revised Revenue Expectations
Dell, whose shares have more than tripled this year, now expects fiscal 2027 revenue for AI-optimized servers of $74 billion, up from its prior expectations of $60 billion.
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.
"Over the past 12 months, we have booked more than $130 billion in AI server orders," Clarke said.
Annual and Quarterly Performance Highlights
The company also raised its annual revenue outlook by $25 billion to $192 billion and adjusted earnings-per-share forecast to $25.50 from its earlier expectations of $17.90.
Revenue for the second quarter was a record $47 billion, exceeding LSEG-compiled analysts' average estimate of $44.92 billion. Adjusted EPS of $7.04 also topped estimates of $4.91.
The company projected third-quarter revenue of $49 billion and adjusted EPS of $6.50, both above analysts' estimates of $41.42 billion and $4.48, respectively.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Sahal Muhammed)