(May 29): Dell Technologies Inc shares surged the most in two years on Friday after the hardware maker gave an outlook for annual sales that far surpassed analysts’ estimates, fuelled by demand for servers that power artificial intelligence (AI) work.
Revenue in the fiscal year ending in January 2027 will be about US$167 billion ($213 billion), including US$60 billion from the sale of AI servers, the Texas-based company said on Thursday in a statement. That’s up from a prior revenue outlook of about US$140 billion and topped analysts’ average estimate of US$142.1 billion, according to data compiled by Bloomberg.
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 company booked US$24.4 billion in AI orders and generated US$16.1 billion in AI server sales in the quarter ended May 1, chief operating officer Jeff Clarke said in the statement. “The AI opportunity shows no signs of slowing.”
The shares rose as much as 35% to US$428.68 in New York as trading got underway, the biggest intraday increase since March 2024 and a record high. Dell’s server business has been viewed as an AI winner this year, sparking the stock more than 150% higher through Thursday’s close.
For the fiscal first quarter, sales jumped 88% to US$43.8 billion, compared with an average estimate of US$35.5 billion. In addition to AI-focused products, the results were boosted by demand for traditional servers containing central processing units. That division’s revenue nearly doubled to US$8.5 billion in the quarter compared to the same period a year earlier.
Dell ended the quarter with a backlog on AI server orders of US$51.3 billion, Clarke said on a conference call with analysts after the results were released.
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As customers move their focus from training AI models to using them, it creates opportunities for Dell products beyond AI servers, chief financial officer David Kennedy said in an interview on Bloomberg Television. “That makes it a more broad-based durable growth over the long term for us,” he said.
The hardware company has been working to hold down costs and improve margins as prices for memory chips rise rapidly. Profit, excluding some items, was US$4.86 a share in the quarter compared to an average estimate of US$2.99.
On Wednesday, the US military announced it would award a US$9.7 billion contract to Dell for help handling licences for Microsoft Corp software. The deal “provides Dell with diversity of growth beyond AI and enterprise”, wrote Amit Daryanani, an analyst at Evercore ISI.
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Dell’s business unit containing personal computers posted a 17% gain in revenue to US$14.6 billion, led by sales to businesses. Analysts, on average, anticipated US$12.9 billion in sales.
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