Dell Annual Profit Outlook Tops Estimates on AI Server Demand

Dell Technologies headquarters in Round Rock, Texas. Photo by Sergio Flores /Bloomberg

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(Bloomberg) — Dell Technologies Inc. gave a profit outlook for the year that exceeded estimates and said it had seen a significant increase in orders for servers to run AI networks.

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Earnings, excluding some items, will be about $9.40 a share in the fiscal year ending in January 2026, an increase from a February forecast, Texas-based Dell said Thursday in a statement. The company reiterated its sales forecast of roughly $103 billion. Analysts, on average, projected profit of $9.21 a share on revenue of $103 billion.

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In the quarter ended May 2, Dell reported sales gained 5% to $23.4 billion, compared with the average estimate of $23.1 billion. Profit, excluding some items, was $1.55 a share. Analysts, on average, projected $1.69. 

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“We generated $12.1 billion in AI orders this quarter alone, surpassing the entirety of shipments in all of FY25 and leaving us with $14.4 billion in backlog,” Chief Operating Officer Jeff Clarke said in the statement.

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Dell has benefited from demand for its high-powered servers to run AI systems, which are used by customers such as Elon Musk’s xAI and CoreWeave Inc. in their data centers. The company expects profitability to improve in its computer and servers-and-storage businesses. Additionally Dell accelerated share repurchases, which has the impact of boosting profit on a per share basis. 

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The US Department of Energy also announced Thursday that it has contracted with Dell and Nvidia Corp. to build a new flagship supercomputer for the National Energy Research Scientific Computing Center. The computer, at Lawrence Berkeley National Laboratory, is planned to take on tasks like fusion research, as well as discoveries in materials design, biomolecular modeling and fundamental physics, the Energy department said in a statement.

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While demand for AI has boosted server sales, a weakening economy and President Donald Trump’s tariffs have created uncertainty and rising costs in parts of the tech sector. 

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Shares of HP Inc., which competes with Dell in the PC market, dropped 8.3% on Thursday after the company issued a weak profit outlook and cut its annual earnings forecast, citing economic and tariff concerns. But the future of much of the tariff regime was thrown into doubt on Wednesday when a panel of three judges at the US Court of International Trade in Manhattan issued a unanimous ruling deeming the the vast majority of them illegal. An appeals court earlier Thursday let the tariffs stay in place while the court case continues.

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For the full year, Dell maintained its previous forecast of $15 billion in AI server revenue. That’s roughly a 50% jump over the $9.8 billion of AI servers it shipped in the fiscal year that ended in January 2025.

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The shares rose about 4% in extended trading after closing at $113.57 in New York. The stock has dipped 1.4% this year.

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