On Thursday, August 29th, Dell Technologies announced that it has raised its annual revenue and profit forecasts due to the increasing demand for its AI-powered servers. This news sent Dell’s shares up by about 3% in extended trading.
The company, based in Round Rock, Texas, has been able to capitalize on the growing demand for AI servers which are powered by Nvidia’s graphics processors. These servers are specifically designed to meet the computing needs of AI systems, including training language models.
Analysts have noted that AI PCs are very lucrative for enterprise customers and expect a strong upgrade cycle next year as Microsoft’s end of support for Windows 10 approaches.
As a result of this increasing demand and success with their AI-optimized servers, Dell now expects their annual revenue outlook to be between $95.5 billion and $98.5 billion compared with earlier expectations of $93.5 billion to $97.5 billion.
Additionally, Dell has raised its annual adjusted profit per share forecast to $7.80 plus or minus 25 cents from earlier expectations of $7.65 plus or minus 25 cents.
The second-quarter results showed substantial growth in demand for AI-optimized servers with a sequential increase of about 23%, bringing the total revenue from these servers to $3.2 billion in the quarter with a backlog amounting to another $3.8 billion.
Chief Operating Officer Jeff Clarke expressed optimism stating “Our pipeline has grown multiple times larger than our backlog.”
These results came after Reuters reported that Dell is once again exploring a potential sale of cybersecurity firm SecureWorks following previous unsuccessful attempts at finding a buyer.
Overall, second-quarter revenues rose by about 9% year-over-year reaching approximately $25.03 billion which surpassed analysts’ average estimates according to LSEG data while adjusted profit per share was reported at an impressive $1.89 per share compared with estimates averaging at around$1.71 per share.
Revenue for the infrastructure solutions group saw significant growth rising about 38% reaching an all-time high at about $11.65 billion whereas revenue from the client solutions group – home to PCs – dropped by around 4 % down to $124 billion in the same period, Dell also took a charge of about 328 million dollars for workforce reductions in the second quarter, CFO Yvonne McGill revealed.
This upward revision comes as positive news not only for Dell but also signifies continued interest and investment in advanced technology such as AI-powered systems which seems poised well within current market trends and demands.
