Dell Technologies has significantly raised its annual profit forecast, a move largely attributed to the burgeoning demand for its AI-powered servers equipped with high-performance Nvidia chips. Following this announcement on Thursday, May 30, 2025, the computer hardware maker's shares experienced a notable increase of 10% in extended trading.

The demand for AI servers has been a significant growth driver. Dell's Chief Operating Officer, Jeff Clarke, highlighted the extent of this surge, stating, "We generated $12.1 billion in AI orders this quarter alone, surpassing the entirety of shipments in all of fiscal 2025 and leaving us with $14.4 billion in backlog." This underscores the massive influx of orders related to artificial intelligence infrastructure.

While Dell, along with competitors like Super Micro Computer, has benefited substantially from this growing appetite for AI servers, the landscape is not without its challenges. The high cost associated with producing these advanced servers, coupled with intense market competition, has put pressure on profit margins for these companies.

Further emphasizing the pivotal role of Dell's technology in the AI domain, the U.S. Department of Energy announced on the same Thursday its plans to launch a new supercomputer named "Doudna." This advanced system will utilize Dell and Nvidia's cutting-edge technology to perform complex computational tasks, showcasing the strategic importance of their hardware in large-scale AI initiatives.

Reflecting its optimistic outlook, Dell now anticipates its annual adjusted profit to reach $9.40 per share, an upward revision from its previous forecast of $9.30 per share. The company also reaffirmed its annual revenue outlook. For the second quarter, Dell projects revenue to be between $28.5 billion and $29.5 billion, significantly above the analysts' average estimate of $25.05 billion compiled by LSEG. The adjusted profit forecast for the second quarter is $2.25 per share, also exceeding estimates of $2.09.

However, the company's first-quarter performance presented a mixed picture. While first-quarter revenue of $23.38 billion surpassed expectations of $23.14 billion, its adjusted profit for the quarter was $1.55 per share, missing analysts' estimates of $1.69.

Commenting on the financial dynamics, Shreya Gheewala, an equity analyst at CFRA Research, noted, "We note potential near-term margin pressure from competitive pricing, tariffs, and geographic mix shifts," indicating that while demand is strong, profitability could face headwinds.

Analyzing Dell's revenue streams, the infrastructure solutions group, which encompasses storage, software, and server offerings, saw a 12% increase in revenue to $10.32 billion in the first quarter. Concurrently, the client solutions group, responsible for its PC business, experienced a 5% rise in revenue, reaching $12.51 billion.

Regarding the PC market, COO Jeff Clarke added that while the PC refresh cycle is currently slower than in previous periods, there are positive signs indicating users are increasingly transitioning to Windows 11 PCs, a category which also includes the emerging AI PCs.