By Jaspreet Singh
May 28 (Reuters) – Dell boosted its annual revenue and profit expectations on Thursday, showing data center expansion by clients is fueling demand for its AI-optimized servers that are powered by Nvidia’s advanced chips.
Shares of the company, which counts CoreWeave, Honeywell International and Samsung Electronics as its customers, rose around 39% in extended trading.
U.S. tech giants including Alphabet and Amazon plan to spend over $700 billion on AI infrastructure this year, which would drive up demand for server and data center equipment from suppliers such as Dell and Super Micro Computer.
The strong results show how Dell has turned into one of the biggest winners of the generative AI boom as the company is managing the memory chip crisis well by implementing price increases and adjusting its supply chain.
“We’re repricing, it feels like, every day. And I’m sure our customers feel that pain. Unfortunately, I don’t see that changing given the world that we’re living in today where you have an inflationary environment,” Dell’s chief operating officer Jeff Clarke said on a post-earnings call.
Dell said it now expects AI server revenue of roughly $60 billion for fiscal 2027, up from its prior expectations of $50 billion.
It raised its annual revenue forecast to between $165 billion and $169 billion, a sharp increase from its previous forecast of $138 billion to $142 billion.
The company also lifted its annual adjusted earnings per share forecast to $17.90 from the prior view of $12.90.
Dell’s revenue rose 88% to $43.84 billion in the first quarter, handily beating LSEG-compiled analysts’ average estimate of $35.43 billion. Its adjusted EPS of $4.86 also topped estimates of $2.94.
“The company is better positioned than rivals due to its scale, supplier relationships, and ability to prioritize demand, helping it gain market share during the (memory) shortage,” said Melissa Otto, head of S&P Global Visible Alpha research.
Dell’s quarterly revenue from its infrastructure solutions group, which includes its storage, software and server offerings, jumped 181%, while sales at its client solutions group — home to PCs — rose 17%.
It also provided second-quarter revenue and adjusted profit per share forecasts that were above market estimates.
On Wednesday, the U.S. Department of Defense awarded a Dell unit a five-year contract worth $9.7 billion to help handle licenses for Microsoft software.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Shreya Biswas)
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