Dell raises full-year profit forecast on strong AI server demand, shares rise
May 29 (Reuters) - Dell Technologies (DELL.N), opens new tab raised its annual profit forecast on Thursday, signaling growing demand for its AI-powered servers that are equipped with Nvidia's (NVDA.O), opens new tab powerful chips, sending the computer hardware maker's shares up 10% in extended trading.
Companies such as Dell and Super Micro Computer (SMCI.O), opens new tab have benefited from the growing demand for these servers, but the high cost of producing them and tough competition have pressured margins.
"We generated $12.1 billion in AI orders this quarter alone, surpassing the entirety of shipments in all of FY25 and leaving us with $14.4 billion in backlog," Dell's Chief Operating Officer Jeff Clarke said.
The results follow the U.S. Department of Energy's announcement on Thursday that it would launch a new supercomputer, named Doudna, which will use Dell and Nvidia's advanced technology to perform complex computing tasks.
Dell now expects annual adjusted profit to be $9.40 per share, compared with its prior forecast of $9.30 per share. The company reiterated its annual revenue outlook.
It forecast second-quarter revenue to be between $28.5 billion and $29.5 billion, above analysts' average estimate of $25.05 billion, according to data compiled by LSEG.
Dell's adjusted profit forecast for the second quarter of $2.25 per share was also above estimates of $2.09.
First-quarter revenue came in at $23.38 billion, compared with estimates of $23.14 billion.
Dell's revenue from its infrastructure solutions group, which includes storage, software and server offerings, rose 12% to $10.32 billion. Revenue from its client solutions group, that houses its PC business, rose 5% to $12.51 billion.
On an adjusted basis, the company earned $1.55 per share in the first quarter, missing estimates of $1.69.
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