Dell Technologies Surges on Soaring AI Server Demand
Record Revenue Fueled by Artificial Intelligence
Dell Technologies has boosted its annual revenue and profit forecasts as demand for artificial intelligence (AI) servers accelerates at a record pace. The company, which manufactures both servers and personal computers, now predicts revenue of
$105 billion to $109 billion for the fiscal year ending January—surpassing its earlier target of $101 billion to $105 billion and analyst expectations[1][3]. The company’s midpoint forecast represents a robust 12% year-over-year growth[3].
- AI server sales are expected to reach $20 billion this year, up from previous projections[1].
- Second-quarter ISG revenue surged by 44%, driven by record shipments and rapid customer investment in AI-enabled data centers[2].
- Servers and networking sales rose by 69% as businesses expanded AI infrastructure[2].
- Dell shipped $10 billion in AI solutions during the first half of its fiscal year, already beating last year’s total[2].
A Mixed Performance Across Business Segments
While Dell’s
Infrastructure Solutions Group (ISG) delivered historically high revenue, the company’s storage business saw a 3% decline to $3.9 billion, signaling that growth is not universal across all departments[2]. Management cites the “attach” opportunity—selling storage alongside AI solutions—but these upticks in infrastructure deals have yet to boost storage sales materially[2]. Additionally, ISG’s operating margin slipped from 11% to 8.8% in the quarter[2].
Adjusted Profit and Future Guidance
Dell raised its guidance for adjusted earnings per share to
$9.55, up from $9.40 previously[1]. For the current quarter (Q3 FY2026), it expects revenue in the range of $26.5–$27.5 billion and non-GAAP EPS of $2.45[2]. The company’s strong execution in AI infrastructure, coupled with ongoing investment in research, flexible payment models, and its broad portfolio, continue to drive both recurring and transactional revenues across over 170 countries[2].
Investor Sentiment and Outlook
Despite its impressive results and upbeat outlook, Dell’s stock faced a decline of over 4% in after-hours trading. Experts attribute this to “high expectations for AI stocks” and the company’s performance being closely watched in a rapidly growing sector[1]. Dell’s share price has increased 16% this year, matching the broader S&P 500 index[1].
Key Takeaways
- Dell’s AI-driven business is outperforming expectations, lifting its full-year guidance for both revenue and profits.
- AI server sales are the main engine of growth, with the ISG segment posting record results, although other business lines—such as storage—remain challenged[2].
- High investor expectations mean strong earnings may not always translate into stock gains, underscoring the intense scrutiny facing major AI players[1].
