Dell raises long-term growth forecasts on strong demand for AI servers

Dell raised its long-term revenue and profit growth forecasts on Tuesday, signaling robust demand for its servers that power artificial intelligence workloads. 

Its shares surged 7 per cent in premarket trading after the company said it expects compounded annual revenue growth between 7 per cent and 9 per cent, up from its prior view of 3 per cent to 4 per cent. 

It also nearly doubled its expectations for annual growth in adjusted earnings per share to at least 15 per cent from 8 per cent, betting on the insatiable demand for computing power needed to run generative AI products such as ChatGPT. 

"Customers are hungry for AI and the compute, storage and networking we provide to deploy intelligence at scale," CEO Michael Dell said in a statement. 

Dell, whose customers include Elon Musk's AI startup xAI and CoreWeave, reiterated its third-quarter and annual forecasts. It had raised its expectations for AI server shipments in August to $20 billion in fiscal 2026. 

A strong PC refresh cycle is expected after Microsoft ends support for Windows 10 next week, as users and companies seek to maintain security and access to the latest features, benefiting PC makers such as HP and Dell. 

While the booming demand for AI severs has boosted Dell's revenue, competition and higher costs of producing those products have pressured its margins, drawing investor concern.