(Reuters) – Dell Technologies forecast annual profit above Wall Street estimates on Thursday on the back of cost cuts and growing demand for its AI-optimized servers, sending the company’s shares up nearly 3% in extended trading.
The company’s AI servers, which are equipped with Nvidia’s powerful chips, are designed to handle intense computational demands of training large language models like those that power chatbots such as ChatGPT.
That has boosted demand for Dell and its rivals including Super Micro Computer, even as competition in the AI server market remains high.
“The deals we’ve booked with xAI and others put our AI server backlog at roughly $9 billion as of today,” Dell’s Chief Operating Officer Jeff Clarke said.
The company faces tough competition from rival PC makers such as HP Inc at a time when a sweeping U.S. trade tariff on China could hurt companies by triggering a price increase on tech products.
Research firm International Data Corporation (IDC) on Thursday lowered its traditional PC forecast for 2025 and beyond, driven by U.S. tariffs on China and weakening market sentiment.
The company forecast fiscal 2026 adjusted profit of $9.30 per share, above the average analyst estimate of $9.23, according to data compiled by LSEG.
The $103 billion midpoint of the company’s annual revenue forecast came in line with estimates.
Dell also announced an 18% increase in its annual cash dividend and a $10 billion increase in the company’s share repurchase authorization.
Revenue for the fourth quarter ended January 31 came in at $23.93 billion, missing estimates of $24.56 billion.
Dell’s revenue from its infrastructure solutions group – which includes its storage, software and server offerings – rose 22% to $11.35 billion. Revenue from its client solutions group, which houses PCs, rose 1% to $11.88 billion.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Shounak Dasgupta)
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