Dell Technologies saw its shares climb 4 per cent on Friday after the company raised its full-year earnings and revenue forecasts, driven by a growth in demand for its AI-powered servers.
The technology giant supplies critical server infrastructure to enterprises and has enhanced its AI capabilities through a strategic partnership with Nvidia earlier this year. This collaboration has enabled Dell to attract mid-sized customers eager to upgrade their servers with advanced AI technology.
The strong demand for AI-optimised servers propelled Dell's Infrastructure Solutions Group to a 38 per cent year-over-year (YoY) revenue increase in the second quarter. Sales of the flagship PowerEdge XE9680 server contributed hugely, with demand rising 23 per cent sequentially to reach USD 3.2 billion. Dell’s AI business pipeline has also expanded dramatically, now estimated at USD 11 billion to USD 13 billion, up from the USD 8 billion to USD 10 billion projected in the first quarter.
Despite the decent performance in its AI segment, Dell’s storage and PC revenues fell short of expectations. However, the company’s overall financial results exceeded analyst predictions, with Dell posting an adjusted earnings per share of USD 1.89 and revenue of USD 25.03 billion.
These strong numbers have prompted at least three brokerages to raise their price targets for Dell’s stock, which currently has a median target price of USD 155. Although the stock is still down 36 per cent from its all-time high in May.
