Dell lifts forecasts as AI data center buildout fuels demand, shares soar

Dell boosted its annual revenue and profit expectations on Thursday, as data center expansion by clients fueled strong demand for its AI-optimized servers powered by Nvidia’s advanced chips.

Shares of the company, which counts CoreWeave, Honeywell International and Samsung Electronics among its customers, rose around 39 percent in extended trading.

U.S. tech giants including Alphabet and Amazon plan to spend over US$700 billion on AI infrastructure this year, which is expected to drive further demand for servers and data center equipment from suppliers such as Dell and Super Micro Computer.

The strong results highlight how Dell has emerged as one of the biggest winners of the generative AI boom. The company has managed the ongoing memory chip shortage effectively through price increases and supply chain adjustments.

“We’re repricing, it feels like, every day. And I’m sure our customers feel that pain. Unfortunately, I don’t see that changing given the world that we’re living in today where you have an inflationary environment,” Dell’s chief operating officer Jeff Clarke said on a post-earnings call.

Dell now expects AI server revenue of roughly US$60 billion (HK$468 billion) for fiscal 2027, up from its previous forecast of US$50 billion.

The company raised its full-year revenue forecast to between US$165 billion and US$169 billion, significantly higher than its prior guidance of US$138 billion to US$142 billion.

Dell also lifted its annual adjusted earnings per share forecast to US$17.90 from the previous target of US$12.90.

In the first quarter, Dell’s revenue surged 88 percent to US$43.84 billion, well above analysts’ average estimate of US$35.43 billion. Adjusted EPS came in at US$4.86, beating estimates of US$2.94.

“The company is better positioned than rivals due to its scale, supplier relationships, and ability to prioritize demand, helping it gain market share during the (memory) shortage,” said Melissa Otto, head of S&P Global Visible Alpha research.

Revenue from Dell’s infrastructure solutions group — which includes servers, storage and software — jumped 181 percent, while sales in its client solutions group (PCs) rose 17 percent.

The company also issued second-quarter revenue and adjusted profit per share forecasts that exceeded market expectations.

On Wednesday, the U.S. Department of Defense awarded a Dell unit a five-year contract worth US$9.7 billion for Microsoft software licenses.

Reuters

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