As the business takes advantage of a global rush to construct AI infrastructure, Dell Technologies increased its annual profit projection Thursday, driven by what executives called “unprecedented demand” for AI servers using Nvidia’s chips.
After generating $12.1 billion in AI server orders in the first quarter alone, which surpassed Dell’s total AI server sales for the entire fiscal year 2025, the tech giant has raised its prediction for adjusted profitability for the year from $9.30 to $9.40 per share.
Record Orders Indicate A Change In The Market
Servers and storage are part of Dell’s Infrastructure Solutions Group, which reported $10.3 billion in revenue for the first quarter, a 12% increase over the same period last year. As a result of what Chief Operating Officer Jeff Clarke described as “unprecedented demand” from cloud service providers and businesses, the company currently has a $14.4 billion backlog of orders for AI servers.
Clarke stated, “We’re experiencing unprecedented demand for our AI-optimized servers,” adding that the company’s pipeline has expanded to “several multiples” of its existing backlog currently. As they look for alternatives to the hyperscale cloud giants, second-tier cloud providers like CoreWeave are driving a large portion of the demand.
Riding The Wave Of AI Infrastructure
Dell’s performance is indicative of a larger trend in the AI server market, which is expected to account for more than 70% of the server industry and reach a valuation of $298 billion by 2025, according to research firm TrendForce. This year, it is anticipated that shipments of AI servers would increase by around 28% globally, accounting for over 15% of all server exports.
The U.S. Department of Energy announced the Doudna, a new supercomputer that would combine Nvidia and Dell technology for demanding computing tasks, at the same time as the company’s results. According to previous reports, Dell has also been involved in talks for a possible $5 billion deal to supply AI servers to Elon Musk’s xAI.
Persistent Margin Pressures
Even while its revenue has increased, Dell still has to contend with production costs and competition that have pushed margins in the AI server market. In the first quarter, the company’s adjusted earnings of $1.55 per share fell short of $1.69 analyst projections.
While consumer revenue fell 19%, Dell’s Client Solutions Group, which sells personal computers, reported more modest growth of 5% to $12.5 billion.
According to Clarke, the AI sector is “lumpy” because of complicated client deployments. “The dependencies in this business are waiting for data centers to be built, power to be provided directly with cooling infrastructure,” he told analysts.