Dell Projects $15 Billion in AI Server Sales for FY2026 Amid Mixed Q4 Results

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On Fri, 28 Feb, 8:06 AM UTC

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Dell Technologies forecasts $15 billion in AI server sales for the upcoming fiscal year, despite reporting mixed fourth-quarter results. The company remains optimistic about AI adoption and its competitive position in the market.

Dell's Ambitious AI Server Sales Projection

Dell Technologies has set an ambitious target of $15 billion in AI server sales for the fiscal year 2026, showcasing the company's strong commitment to the rapidly growing AI infrastructure market 123. This projection comes on the heels of Dell's reported $10 billion in AI-optimized server sales for fiscal year 2025, indicating a significant year-over-year growth expectation 2.

Q4 2025 Financial Performance

Dell's fourth-quarter results for fiscal year 2025 presented a mixed picture:

  • Revenue: $23.9 billion, up 7% year-over-year, but falling short of analyst estimates of $24.55 billion 23
  • Earnings per share: $2.68 (adjusted), beating Wall Street's target of $2.53 2
  • Net income: $1.53 billion, a 27% increase from the previous year 1

The company's Infrastructure Solutions Group, which includes server products, saw a 22% increase in sales to $11.35 billion, while the Client Solutions Group, encompassing PC sales, grew by 5% to $11.88 billion 3.

AI Server Market Position and Strategy

Dell's optimism about its AI server business is rooted in several factors:

  1. Competitive advantage: The company claims to be the first to bring Nvidia's Blackwell GB200 rack to market, emphasizing its engineering prowess and collaboration with key partners 1.

  2. Comprehensive approach: Dell offers not just hardware but also set-up, services, and financing, which it believes gives it an edge in winning deals with cloud service providers and enterprises 1.

  3. Growing demand: The company reported $4.1 billion in backlogged AI server orders at the end of January, indicating strong market interest 2.

Challenges and Market Dynamics

Despite the positive outlook, Dell faces some challenges:

  1. Margin pressure: The company forecasts a decline in its adjusted gross margin rate for fiscal year 2026 due to higher costs associated with building AI servers 5.

  2. Competitive landscape: Dell is operating in a fiercely competitive market, with rivals like Super Micro Computer also vying for market share 5.

  3. Potential tariff impact: The company is reviewing U.S. trade tariff orders on Chinese products to assess potential impacts on operations and pricing 5.

Future Outlook and Investor Relations

For fiscal year 2026, Dell projects:

  • Total revenue between $101 billion and $105 billion 23
  • Adjusted earnings per share of $9.30, slightly above analyst estimates 2

In a show of confidence, Dell has increased its annual dividend by 18% and announced a $10 billion share repurchase authorization 24. However, the stock saw a slight decline in after-hours trading following the earnings report, reflecting investor concerns about the mixed results and future challenges 34.

As Dell navigates the evolving AI infrastructure landscape, its ability to maintain its competitive edge while managing costs and market expectations will be crucial for its continued success in this high-growth sector.

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