Dell raises annual profit forecast on strong AI server demand

Dell raised its yearly profit outlook on Thursday, indicating an increase in demand for its AI-driven servers featuring Nvidia’s powerful chips. Company shares, utilized by clients including Elon Musk’s AI venture xAI and CoreWeave, increased by 2% in after-hours trading.

Dell and Super Micro Computer have gained from increasing demand for these servers, yet the high production costs and intense competition have squeezed profit margins. The outcomes come after the U.S. Department of Energy’s Thursday announcement regarding the introduction of a new supercomputer, called Doudna, which will utilize advanced technology from Dell and Nvidia to execute intricate computing operations.

Dell now anticipates yearly adjusted earnings to be $9.40 per share, up from the previous estimate of $9.30 per share. The firm additionally reinforced its yearly revenue forecast. It projected second-quarter revenue to range from $28.5 billion to $29.5 billion, exceeding analysts’ average estimate of $25.05 billion, based on data gathered by LSEG.

Dell’s revised profit prediction for the second quarter of $2.25 per share exceeded the estimates of $2.09. The first-quarter revenue of the company was $23.38 billion, surpassing expectations of $23.14 billion, although its adjusted earnings of $1.55 per share fell short of the predicted $1.69.

“We note potential near-term margin pressure from competitive pricing, tariffs, and geographic mix shifts,” Shreya Gheewala, equity analyst at CFRA Research, said.

Revenue from Dell’s infrastructure solutions group, which includes storage, software and server offerings, rose 12%, while revenue from its client solutions group, that houses its PC business, rose 5%.