Dell Raises Growth Targets After AI Server Appetite Outpaces Projections
Turns out everyone underestimated AI’s appetite — and Dell Technologies is reaping the rewards. The company nearly doubled its growth forecast for the next four years after COO Jeff Clarke admitted, “We were all wrong how big we thought the AI market was two years ago, and it’s nothing but bigger.” Shares rose 3.5% yesterday, while rivals Super Micro and Hewlett Packard Enterprise gained as well.
- Dell raised its adjusted EPS growth target to at least 15% annually, up from 8%, driven by soaring AI server demand from clients like Elon Musk’s xAI and CoreWeave.
- It shipped $8.2B in AI servers in Q2 and ended with an $11.7B backlog, though new orders fell ~54% quarter over quarter.
The margin puzzle: Despite explosive growth, Dell’s AI servers are delivering only mid-single-digit operating margins, with its infrastructure unit posting 8.8% in Q2 — well below what traditional products typically deliver. Clarke called the figure “acceptable” and still earnings-accretive, but the tech stalwart’s PC troubles are mounting as it continues to lose ground to HP and Lenovo. Still, the bet on AI might buy Dell time to fix what’s lagging.
