Dell bets on AI: record orders and upgraded forecasts drive growth

Demand for artificial-intelligence servers is pushing the tech giant to new highs, despite rising component costs.

Dell Technologies is accelerating on the wave of the AI boom and has once again raised its expectations for the market of AI-dedicated servers. In the third fiscal quarter, which ended on October 31, the company recorded $12.3 billion in AI infrastructure orders, a figure that confirms the solidity of global demand for machines capable of training and running advanced models. Shipments reached $5.6 billion, while the backlog climbed to $18.4 billion, prompting Dell to revise upward its annual sales forecast for AI servers from the previously estimated $20 billion to $25 billion.

The group had already raised its projections in October, anticipating strong growth in sales and profits for the next two years, driven by the accelerated adoption of AI-related products through at least fiscal year 2030. This surge is fueled by unprecedented datacenter investments and dominated by manufacturers such as Dell, Super Micro Computer, and Hewlett Packard Enterprise, all striving to meet increasingly massive orders.

Expansion, however, comes at a cost. Dell is facing a sharp increase in memory-chip prices needed for servers and PCs - a trend that COO Jeff Clarke described as “widespread pressure across the entire value chain.” Despite this, the operating margin of the infrastructure unit reached 12.4%, exceeding analysts’ expectations. The overall gross margin, at 21.1%, also beat forecasts.

Markets reacted positively: the stock rose 2% in after-hours trading, after already gaining more than 9% since the beginning of the year. For the current fiscal year, Dell now expects earnings of $9.92 per share and revenues around $111.7 billion, well above the estimates issued in August. During the quarter, total sales grew 11% to $27 billion, while earnings per share - excluding certain items - stood at $2.59.

Rounding out the picture, the company appointed David Kennedy as CFO after serving in the role on an interim basis. This marks an additional sign of the consolidation and strategic momentum Dell is experiencing, driven by an AI wave that, according to Clarke, “continues to accelerate” and has already generated $30 billion in orders since the beginning of the year.

Andrea Pelucchi