Dell Raises Annual Revenue Outlook on Strong AI Server Sales

Dell Technologies has raised its annual revenue outlook by $25 billion, surpassing analysts' estimates. This boost is driven by a surge in demand for servers to handle artificial intelligence tasks. The company now projects revenue of $192 billion for the fiscal year ending in January 2027, with $74 billion coming from AI server sales.

This is a threefold increase compared to the previous year's outlook. Dell's AI server forecast exceeds analysts' average projection of $173.8 billion. The company is securing contracts for AI computers equipped with Nvidia's AI chips and traditional servers. Despite a global bond selloff and tensions between US and Iran, Dell's operating expenses remain low at 8% of sales, the lowest in the company's history.

Excluding some costs, Dell anticipates fiscal-year earnings of $25.50 per share, surpassing the average estimate of $19.10. The company's shares rose about 8% after closing at $425 in New York. Dell has a $95 billion backlog of AI servers, reflecting future revenue. The company's PC division saw a 20% revenue increase to $15 billion, with operating income rising 42% to $1.1 billion.

Dell's success is attributed to higher memory costs being passed on to customers and more profitable sales of storage systems, as well as streamlining product lines and adding features.