Dell Exceeds Earnings Expectations, Driven by AI Server Demand
Dell Technologies reported fourth-quarter earnings that surpassed Wall Street’s estimates, even though revenue fell slightly short of expectations. The company is experiencing significant growth in its artificial intelligence server business, which is driving its optimistic outlook.
Here’s a breakdown of Dell’s performance compared to LSEG consensus estimates:
- Revenue: $23.9 billion, versus $24.55 billion estimated
- Earnings per share (EPS): $2.68 (adjusted), versus $2.53 estimated
Dell’s stock has seen substantial gains over the past two years, more than doubling due to rising demand for AI systems, which often use Nvidia graphics processing chips. Dell sells Nvidia-based servers to companies like Elon Musk’s xAI, and the company ended January with $4.1 billion in backlogged AI server orders.
“We continue to see strong demand for our AI-optimized servers,” a Dell representative stated. “We are well-positioned to capitalize on the expanding market for AI infrastructure.”
In fiscal 2025, Dell reported approximately $10 billion in sales of AI-optimized servers. The company anticipates AI system sales to reach about $15 billion in the current fiscal year.
Looking ahead to the current quarter, Dell anticipates revenue between $22.5 billion and $23.5 billion, which falls below the average estimate of $23.59 billion, according to LSEG. The company projects adjusted earnings per share of $1.65 for the quarter, compared to analysts’ estimates of $1.76.
For fiscal 2026, Dell is projecting revenue between $101 billion and $105 billion, which is roughly in line with LSEG estimates of $103.17 billion. The company expects full-year earnings per share of $9.30, exceeding the estimates of $9.23.
Net income for the quarter increased to $1.53 billion, or $2.15 per share, compared to $1.21 billion, or $1.66 per share, during the same period last year.
Dell’s financial results also included an 18% increase in its dividend and the announcement of a $10 billion share repurchase authorization.
Revenue increased 7% in the fourth quarter, driven by the Infrastructure Solutions Group, Dell’s server division, which saw a 22% rise in sales to $11.35 billion. However, this fell short of the StreetAccount estimate of $11.7 billion.
Dell’s client solutions group, its largest business, saw a 5% increase in sales, reaching $11.88 billion. This growth was partially offset by a slow laptop market. StreetAccount had anticipated $11.98 billion in revenue for this segment.
In a separate announcement, Dell revealed that it discovered that some suppliers had given it credits that were not recorded appropriately. Dell stated the effect was “not material,” adding that it has restated prior financial statements in 2024 and 2025.
“The company initiated an investigation that indicated that the credits resulted from the actions of certain employees that support a limited number of suppliers,” according to a Dell press release. The statement elaborated that this impacted the Client Solutions Group segment and overstated the cost of goods sold by approximately $200 million in fiscal 2024 and $148 million in fiscal 2025 for the nine months ended November 1, 2024.
