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 powerful chips.
Shares of the company rose more than 10% 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.
These AI servers are critical for powering services such as ChatGPT, as they are equipped with advanced memory chips to store data and instructions, providing the immense computing power required for such applications.
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 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 strong results and forecast show that Dell is managing the memory chip crisis well by implementing price increases and adjusting the company’s supply chain amid intense competition.
Dell’s quarterly revenue from its infrastructure solutions group, which includes its storage, software and server offerings, jumped 181% to $29 billion. Sales from the client solutions group – home to PCs – rose 17% to $14.61 billion.
It also provided second-quarter revenue and adjusted profit per share forecasts that were above market estimates.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Shreya Biswas)
