Shares of Dell Technologies rose 4% Friday on the foot of strong demand for their AI servers. This increase in demand led the company to revise upward its full-year profit and revenue expectations.
Dell strengthened its AI capabilities earlier this year through a partnership with chip giant Nvidia. This partnership has attracted mid-sized customers to upgrade their servers with AI features.
The remarkable performance was attributed exclusively to AI servers, while storage and PC revenues fell short of market expectations. Notably, 80-90% of Dell’s server customers are tier 2 cloud providers, indicating intensified competition with Super Micro Computer.
Demand for AI-optimised servers, including the PowerEdge XE9680, increased 23% sequentially to $3.2 billion in the second quarter. This increase fuelled AI projects planned by the company, which now estimates a value between $11 billion and $13 billion, up from its previous forecast of $8 billion to $10 billion.
Dell’s adjusted earnings per share came in at $1.89 and revenue reached $25.03 billion, both above market expectations. In response, several stockbrokers raised their price targets for Dell stock.
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