Key points:

  • The company demonstrated strong revenue growth, particularly in the infrastructure segment, including servers for artificial intelligence.
  • Dell raised its financial forecasts for the current year.
  • Demand for Dell’s AI-optimized servers remains strong, as evidenced by both revenue growth and a significant backlog of orders.

Dell Technologies Inc. on Thursday raised its full-year revenue and profit forecasts, driven by increased demand for its AI-optimized servers powered by high-performance Nvidia chips. The announcement sent the company’s shares up about 3% in extended trading.

Why is the company raising its forecasts?

Dell Technologies saw strong growth in its infrastructure solutions segment in the second quarter, driven by the rapidly growing artificial intelligence market. Revenue for the division, which includes Nvidia-based servers, reached a record $11.65 billion, up 38% year-over-year. Dell servers, which are specifically designed to handle intensive compute workloads such as training large language models, are in high demand amid the growing need for AI solutions.

COO Jeff Clark noted that the enterprise sector remains a key market for the company, as many organizations are in the early stages of adopting AI technologies. In addition, Dell sees promising opportunities in the area of ​​“sovereign AI,” building on its strong partnerships with governments around the world.

Overall, the company raised its financial guidance for the current year. Full-year revenue is expected to be between $95.5 billion and $98.5 billion, with adjusted earnings per share reaching $7.80. The second-quarter results also beat analysts’ expectations.

Despite the success in the server segment, the client business, which includes personal computers, has faced some challenges. However, the company predicts a strong PC refresh cycle for AI next year after Microsoft ends support for Windows 10.

Dell and Nvidia partnership

Nvidia reported growing demand for its chips from countries actively developing their own artificial intelligence models. The company expects this segment to bring it double-digit billions of dollars in the current fiscal year. Such a trend indicates a global interest in AI technologies and the key role of Nvidia in this area.

Earlier, Nvidia CEO Jensen Huang praised the cooperation with Dell Technologies, emphasizing that such a partnership contributes to the creation of full-fledged platforms for developing and training AI models. Indeed, the demand for Dell’s AI-optimized servers is showing significant growth, as evidenced by a 23% increase in revenue in this segment in the second quarter to $3.2 billion. In addition, a significant volume of unfinished orders for such servers ($3.8 billion) indicates continued high demand in the market.

The growth in demand for artificial intelligence solutions has had a positive impact on the financial performance of Dell Technologies, as evidenced by an increase in the company’s share price by 45% this year.