Dell projected stronger-than-expected results for its upcoming fourth quarter on Tuesday, signaling that a surge in data-center spending to power artificial intelligence systems is continuing to lift demand for its high-performance server lineup.
The upbeat outlook pushed the company’s shares up 4% in after-hours trading. Alongside the forecast, Dell confirmed that David Kennedy will officially take over as its chief financial officer.
The company, which now anticipates higher full-year revenue and earnings, sells AI-focused servers built with Nvidia’s advanced chips.
Growing Momentum in AI-Driven Demand
The improved guidance arrives even as investors worry about shrinking margins in the increasingly competitive AI hardware landscape.
Rivals such as Super Micro Computer have been stepping up pressure, while the cost of producing AI servers remains elevated.
By the close of its third quarter, Dell’s backlog of AI server orders had climbed to $18.4 billion, powered by $12.3 billion in fresh commitments. During the same period, Dell shipped $5.6 billion worth of servers.
Dell’s customer list continues to expand. It recently secured contracts with the U.S. Department of Energy and Abu Dhabi’s G42, and it already provides systems to Elon Musk’s xAI and cloud-computing firm CoreWeave.
The rapid expansion of AI initiatives across the tech sector has driven up prices for dynamic random access memory and NAND storage, two critical components in modern servers.
Rising Costs and Pricing Power
“We’re in a very unique time. It’s unprecedented. We have not seen costs move at the rate we’ve seen,” Chief Operating Officer Jeff Clarke said during the earnings call.
Clarke noted that the rising component prices may eventually flow through to customers but emphasized Dell will “do everything we can to mitigate that.”
According to Melissa Otto, head of S&P Global Visible Alpha research, the current environment—where demand for servers exceeds available supply—could give Dell additional leverage to increase prices without dampening customer interest.
For the fourth quarter, Dell expects revenue in the range of $31 billion to $32 billion, significantly above the $27.59 billion analysts projected based on LSEG data.
Its adjusted earnings outlook of $3.50 per share also surpassed the expected $3.21.
Dell now believes full-year revenue will reach between $111.2 billion and $112.2 billion, up from its prior range of $105 billion to $109 billion, and it has revised its adjusted annual earnings per share upward to $9.92.
Third-quarter sales came in at $27.01 billion, narrowly missing estimates of $27.13 billion, while adjusted earnings of $2.59 beat the $2.47 consensus.
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