Dell Technologies

Michael Dell acknowledges booming AI server demand while anticipating a potential saturation point. Fueled by AI’s evolution, Dell’s server and networking business surged, with AI servers integrating Nvidia chips used by CoreWeave and xAI. Dell raised revenue and EPS growth expectations, projecting $20B in fiscal 2026 AI server shipments. Power consumption is a key challenge, as highlighted by OpenAI’s energy-intensive data center plans, requiring focus on energy-efficient solutions and infrastructure development.

Dell Technologies’ shares rose 5% after unveiling increased long-term financial targets, driven by the burgeoning AI market. The company now projects annual revenue growth of 7-9% and diluted EPS growth of at least 15%, exceeding previous forecasts. Dell attributes this to strong demand for AI compute, storage, and networking solutions, emphasizing its end-to-end AI infrastructure offerings and strategic partnership with Nvidia. Dell anticipates shipping $20 billion in AI servers in fiscal 2026, serving clients like CoreWeave and xAI, highlighting its commitment to AI innovation.

Dell Technologies exceeded analyst expectations for both EPS and revenue in Q2, driven by a 69% surge in server and networking revenue, including AI servers. Full-year revenue outlook was also raised. However, shares dipped in after-hours trading as Q3 EPS guidance fell short of estimates, despite higher revenue projections. The company attributed the profit forecast’s concentration in Q4 to seasonal patterns. Dell plans to double AI server shipments in FY26, emphasizing its commitment to the AI market. Storage revenue declined, while Client Solutions Group saw modest growth.