Dell Technologies on Tuesday again increased its annual outlook as demand from cloud and AI providers for AI-optimized servers pushed quarterly results to record levels. The Round Rock, Texas-based company said rising orders for servers equipped with cutting-edge chips supported by Nvidia helped produce a better-than-expected quarter and prompted management to raise revenue and earnings targets.
In a material upward revision, Dell now expects fiscal 2027 revenue from AI-optimized servers to reach $74 billion, compared with its prior expectation of $60 billion. The company also raised its full-year revenue outlook by $25 billion to $192 billion and adjusted its earnings-per-share forecast to $25.50 from a previous expectation of $17.90.
For the quarter, Dell reported record revenue of $47 billion, topping the LSEG-compiled analysts' average estimate of $44.92 billion. Adjusted earnings per share were $7.04, also exceeding the consensus estimate of $4.91.
Dell projected third-quarter revenue of $49 billion and adjusted EPS of $6.50, forecasts that sit above analysts' estimates of $41.42 billion and $4.48, respectively. Following the results and updated guidance, the company's shares rose about 6% in extended trading. Dell's stock has more than tripled year-to-date.
The company is a significant supplier of AI-optimized rack servers used by AI cloud providers such as Nscale and CoreWeave to assemble high-performance computing clusters. Those systems are commonly paired with Nvidia's latest chips, which the company and its customers say are essential for training and running large AI models, including systems like OpenAI's ChatGPT.
Recent strong forecasts from Nvidia and Super Micro Computer helped bolster investor confidence in the ongoing AI spending cycle, according to Dell's reporting. S&P Global Ratings has projected that AI infrastructure spending could exceed $1.3 trillion by 2027, a projection Dell cited in discussing the broader market opportunity for AI equipment makers.
"Our advantages reinforce one another, and throughout the quarter we used these strengths to drive growth, share gains, profitability and cash generation," said Dell CFO David Kennedy.
The company emphasized that its combined product portfolio and scale have allowed it to capture share and convert demand into profitability and cash flow during the quarter. Management's raised guidance reflects both the near-term momentum in server demand and a longer-term expectation for substantial AI infrastructure spending.
Context on suppliers and market dynamics
Dell, alongside smaller rival Super Micro Computer, is identified as a key supplier of AI-optimized servers to cloud providers building AI clusters. These supplier relationships, and the presence of Nvidia's chips in many server designs, were noted as central to the quarter's results and the company's outlook revisions.