Dell shares rise after boosting sales outlook by US$25 billion

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Photo by Akio Kon/BloombergDell Technologies Inc. shares jumped after the company boosted its annual sales forecast by US$25 billion in a further sign of surging demand for servers to run artificial intelligence tasks.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountRevenue in the fiscal year ending in January 2027 will be about US$192 billion, including US$74 billion from the sale of AI servers, the Texas-based company said Tuesday in a statement. That is up from an outlook in May of about US$167 billion and topped analysts’ average projection of US$173.8 billion, according to data compiled by Bloomberg.The AI server forecast represents a threefold increase over the prior year. This is the fifth straight quarter that Dell’s fiscal year revenue outlook topped estimates.Canada's best source for investing news, analysis and insight.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Investor will soon be in your inbox.We encountered an issue signing you up. Please try againThe shares rose as much as 12 per cent to US$474.77 after trading got underway in New York on Wednesday. The stock has more than tripled this year, although it has declined 14 per cent since its high on Aug. 13. Rival server maker Hewlett Packard Enterprise also gained.Amid a boom in AI demand, Dell is securing contracts for machines packed with Nvidia Corp.’s AI chips, as well as for traditional servers. That equipment contains the type of central processing units, or CPUs, that have regained momentum because they are useful for tasks such as managing AI agents. Dell also is working to tightly control expenses, partly by boosting personal computer prices to account for surging costs of memory chips. The company said its operating expenses are a mere eight per cent of sales, the lowest in Dell’s history.“Over the past 12 months, we have booked more than US$130 billion in AI server orders,” chief operating officer Jeff Clarke said during a conference call after the results were released. “In just the past two quarters, we have generated almost as much revenue from traditional servers and networking as we have in any prior full year in company history.”Excluding some costs, the company projected fiscal-year earnings of US$25.50 a share, compared with an average estimate of US$19.10.Dell’s equipment for AI has won customers such as CoreWeave Inc. and Nscale Global Holdings Ltd., as well as corporate clients and major AI providers. The company said it had a backlog of US$95 billion in AI servers, a measure of future revenue, at the end of the fiscal second quarter.Sales jumped 58 per cent to US$47 billion in the period, which ended July 31. Profit, excluding some items, was US$7.04 a share. Analysts, on average, estimated adjusted earnings of US$4.90 a share and US$44.8 billion in revenue.Dell’s business unit containing personal computers posted a 20 per cent gain in revenue to US$15 billion. The division’s operating income rose 42 per cent to US$1.1 billion. PC shipments throughout the industry are falling while sales rise, owing to increased prices. Dell has protected its profit by passing higher memory costs along to customers.The company is also benefiting from more profitable sales of storage systems after spending time streamlining product lines and adding features.We apologize, but this video has failed to load.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.