loading
loading
Dell's revenue bonanza benefits from killer AI workloads Enterprise AI adoption has pushed up Dell’s revenues, with no signs of its growth slowing down. Revenues of $47 billion in the quarter ended July 31, beat its $45 billion high-end outlook, and were 58 percent higher than a year ago. There was GAAP net income of $4 billion, a 225 percent jump on the year-ago $1.2 billion. Jeff Clarke, Dell’s vice chairman and COO, said in the earnings call that it had been "another outstanding quarter,“ adding: “IT environments have shifted from cost centers to value drivers that fuel growth and competitive advantage, and customers are investing accordingly – creating opportunity across our portfolio. That’s clearest in our AI server business where we booked a record $60.9 billion in orders, recognized a record $16.4 billion in revenue and exited the quarter with a record $95 billion backlog. We’re seeing broader revenue growth as well … Our second quarter results underscore the compounding benefits of our competitive advantages, the breadth of our portfolio and the strength of our operating model.” It’s hard to argue against that, particularly considering that memory shortages have driven up server prices. Financial summary - Gross margin: 20.9 percent vs 18.3 percent a year ago - Operating cash flow: $2.2 billion vs year-ago $2.5 billion & prior quarter’s $4.1 billion - Free cash flow: $8.15 billion vs year-ago $2.5 billion - Cash, cash equivalents, and restricted cash: $14.2 billion vs prior quarters $11.75 billion - Diluted EPS: $6.34, up 273 percent Y/Y Dell has two operating divisions and their summarized results were: Infrastructure Solutions Group (ISG) - servers, networking and storage - Revenue: $31.8 billion, up 89 percent year over year - AI-Optimized Servers revenue: $16.4 billion, up 100 percent year over year - Traditional Servers and Networking revenue: $10.5 billion, up 122 percent year over year - Storage revenue: $4.9 billion, up 26 percent year over year - Operating income: $4.8 billion, up 225 percent year over year Client Solutions Group - business and consumer PCs, workstations and laptops - Revenue: $15.0 billion, up 20 percent year over year - Commercial Client revenue: $13.2 billion, up 22 percent year over year and the strongest Commercial growth in over 4 years - Consumer revenue: $1.8 billion, up 7 percent year over year - Operating income: $1.1 billion, up 42 percent year over year Dell is now overwhelmingly a server-domonsted business, in contrast to its earlier PC-focussed days. The ISG numbers were all records as were overall CSG revenue and commercial client revenue. Dell noted “CSG is our most capital-efficient business that serves as a source of significant cash generation and capital return to shareholders.“ About storage Clarke said: “Storage returned to growth and share gain with strong demand for Dell IP storage products.” Enterprise adoption of AI is providing a tremendous overall boost to Dell’s revenues. Clarke said: “AI is an important catalyst, but the opportunity extends well beyond AI optimized infrastructure. Ai requires modern, disaggregated architectures that keep data accessible and in motion across compute, storage, and networking. It is also accelerating investment across traditional IT environments as customers seek greater performance, efficiency and resiliency.” Storage growth exhibited record demand growth in Dell-IP, now above the market growth rate for 6 consecutive quarters. And that’s with suppliers like ExaGrid saying it’s taking chunks out of its PowerProtect (Data Domain) backup appliances, and VAST Data growing at a high rate as well. Clarke said: “PowerStore has now grown ten consecutive quarters in a row. We have PowerScale five quarters in a row. ObjectScale four quarters in a row. Data Domain three quarters in a row. Our all flash array have grown now ten quarters in a row, so there is inherent demand. Our products are more competitive and we're seeing that play out in the marketplace from the largest enterprise customers down to small and medium sized businesses.” Competing suppliers can grow their (relatively small) businesses at Dell’s expense, but its market share is huge and still growing. Dell said its Neocloud, Sovereign, and Enterprise customer base grew to over 6,500 customers., with Clarke saying: “3,300 of them have happened in the last three quarters. It took us eight quarters to get to the first 3,200. That acceleration is enterprise.” Clarke noted: “As we see it, agentic demand is reshaping the data center in underlying infrastructure. (AI) Inference is past training, and it's pure demand in our industry. We think the tokens that inference drives is going to grow 87 times to 3,600 quadrillion tokens by 2030. Training demand grows 5x to 850 Zettaflops by 2030. Enterprise agentic is expected to be the single largest workload by 2028. We're expecting AI to be 75% of all data center demand by 2030, adding 200GW of power over that same time frame, and half of that, we believe, is right in our sweet spot with our customers, the neocloud, sovereigns and enterprises. …we think the opportunity in front of us is more than $1 trillion over that time frame.” Eat your heart out HPE. Dell is chasing AI opportunities as fast as it can, with Clarke saying Dell was: “the first to ship rack systems engineered on the Nvidia Vera Rubin platform.” Clarke noted: “We are also seeing AI related tailwinds in traditional servers and networking, along with early signs of increased storage demand as customers prepare, manage and protect growing volumes of data.” He said: “We saw strong growth across PowerFlex, PowerStore, PowerProtect, and PowerVault, with PowerStore posting double digit demand growth for the ninth consecutive quarter. PowerScale and ObjectScale also drove another exceptional quarter in unstructured storage, which has now grown at double digit or better for three consecutive quarters. “Storage is becoming a more meaningful contributor to our growth and profitability. Dell IP continues to increase as a percentage of our storage mix, and margins continue to improve, supporting overall ISG profitability. Our share gains, expanding Dell IP mix and accelerating pace of product development give us confidence in the opportunity ahead.” He believes that enterprise customers are upgrading storage as they modernize their IT environments and “We are beginning to see incremental demand from AI workloads, which require customers to prepare, manage and move increasingly large volumes of data.” The company spent $4.3 billion on share repurchases and dividends in the quarter and declared a quarterly cash dividend of $0.63/ common share, payable on Oct. 30 to shareholders of record as of Oct. 20. Q3 revenue guidance is $49 billion ± $500 millionB , an 81 percent Y/Y rise at the mid-point. CFO David Kennedy said: “We expect ISG to grow roughly 120 percent, driven by AI server revenue, up 3x year over year to $74 billion. We expect traditional servers to grow just over 100 percent storage up in the mid-teens and CSG revenue to grow in the mid-teens.” Turning to the full year, Kennedy said: “With AI momentum accelerating and our opportunity expanding across the portfolio, we’re raising our full-year FY27 revenue outlook by $25 billion to $192 billion, up nearly 70 percent year over year.” That’s ± $2 billion. That’s also a 15 percent rise from the previous $167 billion full year outlook set three months ago; an astonishing jump and pretty much all due to AI training and inferencing, and AI-led growth is accelerating; it's a gift that just keeps on giving to a Dell that positioned itself early and accurately for this AI bonanza.
document fetched 2026-09-03 02:59 · canonical https://blocksandfiles.com/ai-ml/2026/09/02/dells-revenue-bonanza-benefits-from-killer-ai-workloads/5293866