By Jaspreet Singh
Feb 26 (Reuters) – Dell forecast fiscal 2027 revenue above Wall Street estimates on Thursday, betting on growing demand for its artificial intelligence-optimized servers, sending its shares up around 11% in extended trading.
The company also announced a 20% hike in its cash dividend and an additional $10 billion for its share repurchase program.
Big Tech firms, such as Alphabet, Microsoft, Amazon and Meta, are expected to spend at least $630 billion to build AI infrastructure this year, which would boost demand for vendors like Dell and rival Super Micro Computer.
U.S. trade regulations and surging memory chip costs due to the AI infrastructure build out has forced companies like Dell and HP Inc to implement price increases, which are helping them offset cost pressures.
Almost all servers have memory chips, as they hold data and instructions to keep running the processors at high speed, which is of paramount importance for AI applications.
Dell expects AI servers revenue to grow 103% to about $50 billion in fiscal 2027.
The company said it has more than 4,000 AI server customers, including Elon Musk’s AI startup xAI and CoreWeave.
Dell forecast annual revenue of $138 billion to $142 billion, above analysts’ average estimate of $125.54 billion, according to data compiled by LSEG.
The memory chip squeeze is expected to dampen global demand for consumer electronics, including PCs, smartphones and gaming consoles. HP Inc said it expected fiscal 2026 results to be at the low end of its prior forecasts, while China’s Lenovo warned about mounting pressures on PC shipments.
Dell expects annual adjusted earnings per share of $12.90 per share, above estimates of $11.59.
It reported record revenue of $33.4 billion in the fourth quarter, beating estimates of $31.73 billion. Its adjusted EPS of $3.89 also exceeded estimates of $3.53.
Dell’s revenue from its infrastructure solutions group, which includes its storage, software and server offerings, jumped 73% to $19.60 billion, while sales from the client solutions group – home to PCs – rose 14% to $13.49 billion.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Shinjini Ganguli)
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