AsianFin -- Dell Technologies Inc. shares rallied 5.8% on Wednesday as the company raised its full-year revenue and AI server shipment projections, signaling sustained momentum in the artificial intelligence (AI) infrastructure market despite missing its third-fiscal-quarter revenue estimates. The server maker boosted its annual AI server shipment forecast by $5 billion to $25 billion and increased its fiscal 2026 revenue outlook to approximately $111.7 billion from $107 billion previously.
Credit：Dell
Dell reported record AI server orders of $12.3 billion for its fiscal quarter ended October 31, bringing year-to-date orders to an unprecedented $30 billion, with a backlog reaching $18.4 billion. The company shipped $5.6 billion worth of AI servers during the October quarter, while overall server revenue climbed 37% to $10.1 billion.
The upbeat forecast dispels investor concerns about potential slowdowns in AI infrastructure spending that had pushed Dell stock nearly 20% below its recent high over the past month. Fourth-quarter revenue guidance of $31.5 billion substantially exceeded analysts expected $27.6 billion.
Dell's strong performance underscores continued demand for high-performance servers needed to train and run AI models, with Chief Operating Officer Jeff Clarke noting the business is expanding beyond big cloud providers to include neocloud, sovereign and enterprise customers.
Revenue Misses Estimates But Profitability Impresses
Dell’s revenue for the third fiscal quarter climbed 11% year-over-year (YoY) to $27 billion, just shy of analysts estimated $27.2 billion. Howeer, adjusted earnings per share (EPS) of $2.59 beat expectation of $2.47, driven by stronger-than-expected margins.
Dell’s Infrastructure Solutions Group generated $14.1 billion in revenue,with operating income rising 16% YoY to $17 billion. The unit's operating margin reached 12.4%, exceeding the average analyst estimate of 11.2%. Overall gross margin came in at 21.1%, above the projected 20.4%.
Within Client Solutions Group, commercial PC revenue gained 5% to $10.6 billion, though consumer revenue declined shed 7% to $1.9 billion. The PC business posted $748 million in operating income. "Commercial profitability was stable, driven by steady pricing sequentially as customers prioritize richly configured, AI-ready devices," Chief Financial Officer (CFO) David Kennedy said in prepared remarks.
Management Signals Accelerating AI Momentum
Dell executives expressed strong conviction in the company's AI business trajectory during the earnings call. "AI momentum is accelerating in the second half of the year," Clarke stated, attributing the strength to Dell's "unique ability to engineer bespoke high-performance solutions, rapidly deploy large, complex clusters and provide global support."
Kennedy highlighted the broadening customer base, noting that demand extends across neoclouds, sovereigns and enterprises. The company expects to ship $9.4 billion of AI servers in the fourth quarter alone, excluding a recently announced deal with data-center operator Iren for Nvidia GB300 NVL72 compute clusters in Canada.
Clarke acknowledged rising memory chip costs across products but emphasized Dell's direct sales model provides flexibility to adjust pricing quickly. "We're going to do everything we can to minimize the impact," he said, targeting recovery of more than the typical two-thirds of cost increases within 90 days.
Wall Street Sees Sustained AI Infrastructure Build-Out
The guidance increase and robust order book suggest hyperscalers and enterprises remain committed to aggressive AI infrastructure investments. Dell's $18.4 billion backlog includes a significant shift toward Nvidia's next-generation GB300 systems, indicating customers are positioning for more powerful capabilities.
Dell's differentiation at the rack and solution level, combined with its engineering capabilities for large-scale deployments, appears to be resonating with customers as power density requirements move toward 500 kilowatts per rack and beyond. The company maintained its projection for full-year adjusted EPS of approximately $9.92, up from $9.55 previously anticipated.
The company also named David Kennedy as permanent chief financial officer after serving in an interim capacity. Dell spent $1.6 billion during the quarter on share repurchases and dividends.
