Dell’s stock surged by 20% as the company reported a long queue for its AI servers

Dell Technologies has reported electrifying investor sentiment following quarterly report announcements that saw its shares spike by almost 20% post-trading. The cause of the investor enthusiasm is the robust growth in its server market segment, even as its customer market segment performs steadily. According to Dell, demand for AI servers notably surpasses their pre-existing order portfolio, which continues to see impressive growth.

Specifically, Dell currently holds AI server orders worth $2.9 billion, a notable increase from $1.6 billion in the previous quarter and $800 million the quarter before that. In monetary terms, the volumes of these server systems supplied over the last two quarters amount to $1.5 billion, $800 million of which was delivered in the last quarter. However, Dell’s capacity to scale these supplies is largely constrained by the accessibility of NVIDIA accelerators. While Dell acknowledges some improvement in the availability of H100 accelerators, demand for AMD Instinct MI300 accelerators and NVIDIA’s next-generation solutions (Blackwell) is also on the rise. Essentially, potential demand for Dell’s AI server systems significantly exceeds the mentioned order portfolio of $2.9 billion.

Conversely, Dell’s client revenues shrunk by 12%, year-on-year, to $11.7 billion in the last quarter, marking a 5% consecutive decline. In essence, Dell’s PC segment business is following similar trends to those seen by Lenovo and HP Inc. Dell believes the demand for new PC’s in the corporate sector this year will be driven by the need to move away from Windows versions losing technical support. Though AI-enhancing processors will be introduced in the second half of the year, their popularity is expected to rise gradually. Revenues from Dell’s commercial PC sector shrank by 11% to $9.56 billion, while the client sector contributed a mere $2.15 billion, marking a 19% decline.

Overall, Dell’s revenue shrunk by 11% to $22.32 billion in the last quarter, slightly surpassing analyst expectations of $22.16 billion, and closer to its forecast range. The infrastructure solutions segment, which includes server systems, saw a 6% drop in revenue to $9.33 billion, still outperforming market expectations.

For the current fiscal year, Dell Technologies anticipates revenue between $91 billion and $95 billion, slightly above investor expectations. While client sector revenue is projected to decrease by 1–3% by year-end, the infrastructure (including the server) segment is expected to grow by 14–16%, mainly due to increasing customer interest in AI systems. Dell’s post-report stock price boost was also likely helped by its announcement of a 20% dividend increase to $1.78 per share.