Dell Jumps Most In Two Years On Strong AI Server Sales Outlook

Dell Technologies Inc. shares jumped by the most in two years after the company gave an outlook for sales of its artificial intelligence servers that exceeded estimates, a sign of robust demand for machines helping fuel the AI data center build-out.

The company will generate about $50 billion in AI server revenue in the current fiscal year, which ends in January 2027, Dell said Thursday in a statement. 

“The AI opportunity is transforming our company,” Chief Operating Officer Jeff Clarke said in the statement. Dell enters the year “with a record backlog of $43 billion — powerful proof that our engineering leadership and differentiated AI solutions are winning,” he said.

The shares surged as much as 18% on Friday after trading got underway in New York, their biggest intraday gain since March 1, 2024. The stock was already up 13% over the past year heading into Thursday's report.

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Dell's servers designed to run AI workloads are attracting customers from companies that rent computing power like CoreWeave Inc. and Nscale Global Holdings Ltd., as well as corporate clients and major AI providers. The Texas-based company has been working to hold down costs and improve margins even as prices for memory chips rise rapidly.

In the fiscal fourth quarter, Dell reported an operating margin of 14.8% for its server and networking unit, compared with an average estimate of 12.9%. In its computer unit, the margin was 4.7%. Analysts, on average, projected 6.18%.

“Across the industry, the environment remains highly dynamic, with unprecedented AI demand creating sustained supply tightness and frequent pricing resets,” Clarke said in prepared remarks, referring to the memory chip issue.

Earnings, excluding some items, will be about $12.90 a share in the current fiscal year, Dell said in the statement. Sales will be about $140 billion. Analysts, on average, projected profit of $11.56 a share on revenue of $126.3 billion.

The company also announced a $10 billion increase in its share buyback program.

In the quarter, total sales increased 39% to $33.4 billion, compared with the average estimate of $31.7 billion. Profit, excluding some items, was $3.89 a share. Analysts, on average, projected $3.52. 

Revenue produced by the infrastructure group increased 73% to $19.6 billion. Sales in the computer unit, called the Client Solutions Group, jumped 14% to $13.5 billion.  

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(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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