Dell Boosts Projections Amid Rising Demand for Nvidia-Powered AI Servers
Dell raises its annual revenue and profit forecasts due to rising demand for Nvidia-powered AI servers. Nvidia's partnership with Dell helps businesses establish their own "AI factories." Dell's stock has increased by 45% this year, indicating a positive market sentiment.
This positive news boosted the company's shares by about 3% in after-hours trading.
Dell's infrastructure solutions group, which includes Nvidia-powered servers, experienced a 38% increase in revenue during the second quarter, reaching a new high of US$11.65 billion. These servers are specifically designed to handle the high computational demands of AI systems, particularly when training large language models.
Dell's Chief Operating Officer, Jeff Clarke, emphasised the enterprise sector's significant potential, pointing out that many businesses are still in the early stages of implementing AI technologies. He also mentioned Dell's strategic focus on "sovereign AI," which leverages the company's strong governmental relationships around the world.
Nvidia recently revealed that countries developing AI models in their native languages are turning to its chips, which is expected to boost revenue by the low double-digit billions by January 2025. Nvidia's CEO, Jensen Huang, praised the partnership with Dell, emphasising their role in assisting businesses in establishing their own "AI factories."
Dell's stock has risen by 45% this year, indicating investor confidence in the company's growth prospects. The company now expects annual revenue to be between $95.5 billion and $98.5 billion, up from the previous forecast of $93.5 billion to $97.5 billion. Dell also raised its adjusted annual profit per share forecast to US$7.80, with a 25 cent variance.
In the second quarter, demand for Dell's AI-optimized servers increased by about 23% sequentially, reaching $3.2 billion. The backlog for these servers is $3.8 billion, indicating significant future growth potential. Clarke stated that Dell's pipeline has grown significantly beyond its current backlog.
Despite strong performance in the AI server segment, Dell struggled in the PC business, losing market share to competitors. A promising refresh cycle for AI PCs is expected next year, following Microsoft's planned end of support for Windows 10.
The client solutions group, which is in charge of PCs, reported a revenue decrease of about 4% to $12.41 billion in the second quarter. Analysts noted that Dell lost PC shipment share in key markets during this time, despite remaining the top vendor in the US business market.
Furthermore, Dell incurred a US$328 million charge for staff reductions in the second quarter. In a separate report, Reuters revealed that Dell is considering selling cybersecurity firm SecureWorks after previous unsuccessful attempts to find a buyer.Dell raises its annual revenue and profit forecasts due to rising demand for Nvidia-powered AI servers. Nvidia's partnership with Dell helps businesses establish their own "AI factories." Dell's stock has increased by 45% this year, indicating a positive market sentiment.
This positive news boosted the company's shares by about 3% in after-hours trading.
Dell's infrastructure solutions group, which includes Nvidia-powered servers, experienced a 38% increase in revenue during the second quarter, reaching a new high of US$11.65 billion. These servers are specifically designed to handle the high computational demands of AI systems, particularly when training large language models.
Dell's Chief Operating Officer, Jeff Clarke, emphasised the enterprise sector's significant potential, pointing out that many businesses are still in the early stages of implementing AI technologies. He also mentioned Dell's strategic focus on "sovereign AI," which leverages the company's strong governmental relationships around the world.
Nvidia recently revealed that countries developing AI models in their native languages are turning to its chips, which is expected to boost revenue by the low double-digit billions by January 2025. Nvidia's CEO, Jensen Huang, praised the partnership with Dell, emphasising their role in assisting businesses in establishing their own "AI factories."
Dell's stock has risen by 45% this year, indicating investor confidence in the company's growth prospects. The company now expects annual revenue to be between $95.5 billion and $98.5 billion, up from the previous forecast of $93.5 billion to $97.5 billion. Dell also raised its adjusted annual profit per share forecast to US$7.80, with a 25 cent variance.
In the second quarter, demand for Dell's AI-optimized servers increased by about 23% sequentially, reaching $3.2 billion. The backlog for these servers is $3.8 billion, indicating significant future growth potential. Clarke stated that Dell's pipeline has grown significantly beyond its current backlog.
Despite strong performance in the AI server segment, Dell struggled in the PC business, losing market share to competitors. A promising refresh cycle for AI PCs is expected next year, following Microsoft's planned end of support for Windows 10.
The client solutions group, which is in charge of PCs, reported a revenue decrease of about 4% to $12.41 billion in the second quarter. Analysts noted that Dell lost PC shipment share in key markets during this time, despite remaining the top vendor in the US business market.
Furthermore, Dell incurred a US$328 million charge for staff reductions in the second quarter. In a separate report, Reuters revealed that Dell is considering selling cybersecurity firm SecureWorks after previous unsuccessful attempts to find a buyer.
Dell raises annual revenue and profit forecasts due to surging demand for Nvidia-powered AI servers.
Nvidia's partnership with Dell contributes to the growth of businesses establishing their own "AI factories."
Dell's stock has risen by 45% this year, reflecting positive market sentiment.
Source: REUTERS