Dell Increases Financial Forecasts on AI Server Demand
- tech360.tv
- Aug 29, 2025
- 2 min read
Dell Technologies has increased its annual revenue and profit forecasts, driven by strong demand for its artificial intelligence (AI)-optimised servers. These servers are powered by advanced Nvidia chips, a key component in AI workloads. Despite the positive forecast, shares in the company fell approximately 5% in extended trading due to a third-quarter profit outlook that was below analysts' estimates.
The rising demand for AI servers benefits companies like Dell and Super Micro Computer. However, the high cost of production and intense competition have put pressure on profit margins. Dell now projects USD 20 billion in fiscal 2026 revenue from AI server shipments, an increase from its previous forecast of USD 15 billion.
Customers utilising Dell's AI servers include Elon Musk's AI startup xAI, and CoreWeave. During the second quarter, the organisation booked USD 5.6 billion in AI orders and shipped a record USD 8.2 billion, resulting in an overall backlog of USD 11.7 billion.
The company elevated its annual revenue forecast to between USD 105 billion and USD 109 billion, up from earlier expectations of USD 101 billion and USD 105 billion. Dell now anticipates adjusted earnings per share of USD 9.55, an increase from its prior projection of USD 9.40.
For the third quarter, Dell forecasts revenue between USD 26.5 billion and USD 27.5 billion, surpassing analysts' average estimate of USD 26.05 billion. Conversely, the adjusted profit forecast for the quarter, at USD 2.45 per share, was below estimates of USD 2.55 per share, according to data compiled by LSEG.
Second-quarter revenue reached USD 29.78 billion, exceeding estimates of USD 29.17 billion. Excluding specific items, the company reported an adjusted profit of USD 2.32 per share, slightly surpassing estimates of USD 2.30 per share. The adjusted gross margin rate for the quarter fell to 18.7% from the previous year, missing estimates of 19.6%.
Dell's infrastructure solutions group, which encompasses its storage, software, and server offerings, saw revenue rise by 44%. The client solutions group, responsible for personal computers (PCs), experienced a 1% growth.
A significant PC refresh cycle is anticipated after Microsoft concludes support for Windows 10 in Oct. Ben Yeh, principal analyst, PC research at Omdia, noted that about half of all PCs currently in use still run Windows 10, with many likely needing replacement due to an inability to upgrade.
Dell increased its annual revenue and profit forecasts, citing strong AI server sales.
The company now expects USD 20 billion in fiscal 2026 AI server revenue.
Despite higher forecasts, shares fell due to a lower-than-estimated third-quarter profit outlook.
Source: REUTERS
