Dell raises annual profit outlook driven by strong AI server sales

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.

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.

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.

“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.

Dell has benefited from demand for its high-powered servers that 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.

Dell is “experiencing unprecedented demand for our AI-optimized servers,” Clarke told analysts on a conference call after the results.

For the current quarter, Dell said profit would be about $2.25 a share and sales about $29 billion, both above analysts’ average estimate. Operating expenses will decline in the “low single digits.”

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 department said in a statement.

The AI market is exciting but also “lumpy,” said Clarke on the call. “The customer deployments we have in front of us are large. They’re complex,” he said. “The dependencies in this business are waiting for data centers to be built, power to be provided directly with cooling infrastructure. We’re orchestrating a highly complex supply chain.”

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.

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.

Dell said its guidance reflects everything it currently knows about tariffs.

The shares rose about 2% in extended trading after closing at $113.63 in New York. The stock has dipped 1.4% this year.

Sales of personal computers for consumers, an area where Dell is pitching high-end machines and gaming rigs, were weaker than expected in the fiscal first quarter and faced pricing pressure from rivals, leading to lower profit, the company said. Revenue generated by consumer PCs dropped 19%, in the period. Operating income for the unit that includes consumer and business machines fell 16%.

The company is focusing largely on commercial PCs, where profit margins are more lucrative. Even in the AI server market, investors have been concerned that margins are being squeezed by demand for the more-costly products.

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. Bloomberg