Dell Technologies has significantly increased its long-term financial targets, signaling strong confidence in the sustained demand for its artificial intelligence servers. The company nearly doubled its annual profit growth forecast for the next four years, citing the ongoing boom in generative AI that requires powerful computing infrastructure.
Key Takeaways
- Dell raised its annual adjusted earnings per share (EPS) growth target to at least 15%, up from a previous forecast of around 8%.
- The company now expects compounded annual revenue growth of 7% to 9% over the next four years, a significant increase from its prior 3% to 4% outlook.
- Growth is primarily driven by the Infrastructure Solutions Group, which includes AI servers, with its revenue growth forecast raised to 11-14% from 6-8%.
- The Client Solutions Group, which includes personal computers, is expected to maintain steady growth of 2% to 3%.
Revised Financial Projections Signal New Era
Dell Technologies announced a major revision to its long-term financial outlook on Tuesday, reflecting the transformative impact of artificial intelligence on its business. The company now projects its adjusted earnings per share will grow by a minimum of 15% annually over the next four years. This is a substantial increase from the previous guidance of approximately 8%.
Alongside the profit forecast, Dell also lifted its revenue expectations. The company anticipates compounded annual revenue growth to be between 7% and 9%. This new target more than doubles its previous forecast, which was set at 3% to 4%.
Updated Growth Targets at a Glance
- Adjusted EPS Growth: From ~8% to at least 15% annually.
- Total Revenue Growth: From 3-4% to 7-9% annually.
- Infrastructure Revenue Growth: From 6-8% to 11-14% annually.
AI Infrastructure at the Core of Growth
The primary driver behind Dell's optimistic forecast is the explosive demand for servers capable of handling complex AI workloads. These systems provide the essential computing power for generative AI models like ChatGPT and services from companies such as Elon Musk's xAI and AI cloud provider CoreWeave, both of which are Dell customers.
This demand has positioned Dell as a key beneficiary of the AI revolution. The company's Infrastructure Solutions Group (ISG), which encompasses its server, storage, and networking products, is now expected to achieve compounded annual revenue growth between 11% and 14%. This is a significant jump from the earlier projection of 6% to 8%.
"Customers are hungry for AI and the compute, storage and networking we provide to deploy intelligence at scale," said CEO Michael Dell. He added that despite two years of significant progress, the industry is still "in the early stages of AI adoption."
In August, Dell had already signaled its strong position in the market by raising its AI server shipment forecast to $20 billion for the 2026 fiscal year. The company also confirmed that its third-quarter and full-year forecasts remain on track.
Market Position and Competitive Landscape
Dell's updated guidance may help address investor concerns regarding profitability in the highly competitive AI server market, where high component costs can impact margins. The company's ability to manage its supply chain and leverage its market position is seen as a key advantage.
Dell's Competitive Edge
Analysts point to Dell's established global supply chain, large-scale production capabilities, and long-standing relationships with major enterprise customers as significant advantages over smaller competitors. This allows the company to secure components and fulfill large orders more efficiently.
According to Emarketer analyst Jacob Bourne, Dell holds a distinct edge over rivals. "Dell has a volume advantage due to its scale, established supply chain, and relationships with major buyers, compared to rivals like Super Micro," Bourne stated.
This market strength is crucial as technology companies worldwide race to build out their AI capabilities, creating a sustained demand for high-performance computing hardware.
Contrasting Fortunes in Personal Computing
While the server business is experiencing rapid growth, Dell's outlook for its personal computer division remains more modest. The company maintained its revenue growth forecast for the Client Solutions Group (CSG), which includes desktops and laptops, at 2% to 3%.
The PC market has faced challenges in recent years due to intense competition and shifting consumer demand following the pandemic-era boom. However, Dell continues to hold a strong position, particularly within the enterprise segment where it supplies hardware to large corporations.
The contrast between the two divisions highlights a broader industry shift. While the PC market matures, the demand for powerful infrastructure to support AI development and deployment has become the new engine of growth for legacy hardware giants like Dell.