Dell reveals how AI will support its $97.5 bn revenue target

Dell Technologies has explained how AI (artificial intelligence) will assist it in achieving its revenue forecast of $93.5 billion – $97.5 billion for fiscal 2025, compared with its prior forecast of $91 billion – $95 billion.
Dell XPSDell Technologies expect Infrastructure Solutions Group (ISG) to grow greater than 20 percent and Client Solutions Group (CSG) to grow low single digits. Dell also expects the combination of ISG and CSG to grow 11 percent.

It forecast second-quarter revenue of $23.5 billion – $24.5 billion. Dell expects the combination of ISG and CSG to grow 8 percent, with ISG up in the mid twenties.

In ISG, Dell’s AI optimized server orders increased to $2.6 billion, with shipments up more than 100 percent sequentially to $1.7 billion. Dell has shipped more than $3 billion of AI servers over the last 3 quarters. Dell’s AI server backlog is $3.8 billion, growing sequentially by approximately $900 million. Dell’s AI optimized server pipeline grew quarter over quarter again.

“We’ve seen an expansion in the number of enterprise customers buying AI solutions which remains a significant opportunity for us given we are in the early stages of AI adoption,” Dell Technologies CFO Yvonne McGill said.

Traditional server demand remained strong in Q1. Traditional server revenue grew for the second consecutive quarter and the fourth consecutive quarter sequentially. Dell says storage demand has stabilized with revenue flat.

Dell’s Commercial PC demand has also stabilized. Dell is optimistic about the coming PC refresh cycle, driven by multiple factors. The PC install base continues to age. Windows 10 will reach end-of-life later next year. The industry is making significant advancements in AI-enabled architectures and applications.

Dell will focus on commercial PCs, high-end of consumer, and gaming, driving a strong attach motion — a strategy that has served well across various economic cycles.

Future delivered at Dell Technologies World

Last week, Dell has highlighted its AI strategy — to accelerate adoption of AI – at the Dell Technologies World customer event in Las Vegas.

Dell extended engineering leadership with new features and capabilities across its portfolio, including the new PowerEdge XE9680L, an 8-way GPU server with 12 Gen 5 PCIe slots and direct-to-chip liquid cooling that improves overall power efficiency by 2.5 times.

With its 4U form factor, customers can buy the densest rackable architecture in the industry with up to 9 XE9680Ls and 72 high wattage GPUs in one rack that can support performance up to 130 kilowatts straight from AI factory.

In storage, Dell announced software updates to PowerStore which now includes the availability of QLC. PowerStore software updates give new and existing customers up to a 66% performance boost and native sync replication for file and block.

Dell added the PowerScale F910 to AI optimized portfolio, the hardware and software capabilities with two times faster write performance than our competition.

Dell broadened networking portfolio with the new PowerSwitch Z9864 with 51 terabits per second of throughput for AI workloads.

In client, Dell announced Dell’s next-generation AI PCs. The Qualcomm Snapdragon XElite powers its XPS and Latitude 7455 available in June. These 45 plus TOPS PCs can support 13 billion plus parameter models, assisting customers to run models like Llama 3 directly on their PCs.

REVENUE

Dell Technologies said its revenue for the first quarter ended May 3 rose 6 percent to $22.24 billion, breaking a streak of six-quarters of declines.

The company’s revenue for infrastructure solutions group – which includes its storage, software and server offerings – rose 22 percent to $9.23 billion.

Servers and networking revenue was a record $5.5 billion, up 42 percent, with demand strength across AI and traditional servers. Storage revenue was flat at $3.8 billion.

Client Solutions Group (CSG) delivered first quarter revenue of $12 billion. Commercial client revenue was $10.2 billion, up 3 percent, and Consumer revenue was $1.8 billion, down 15 percent.

“Servers and networking hit record revenue in Q1, with our AI-optimized server orders increasing sequentially to $2.6 billion, shipments up more than 100 percent to $1.7 billion, and backlog growing more than 30 percent to $3.8 billion,” Jeff Clarke, vice chairman and chief operating officer, Dell Technologies, said.

Baburajan Kizhakedath

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