Dell's AI-Focused Strategy Pays Off, Over 15% EPS Growth Expected Through 2030

Dell Technologies Inc. has significantly revised its growth forecasts, citing increasing demand for artificial intelligence (AI) products. The company now expects annual revenue growth of 7% to 9% for the next four years, compared with its previous estimate of 3% to 4%. It also projects earnings per share, excluding certain items, to grow by at least 15% annually, up from the earlier forecast of about 8%.

Chief Operating Officer Jeff Clarke announced the updated “long-term financial framework” at an investor event in New York. The projections extend through the 2030 fiscal year, reflecting Dell’s confidence in sustained demand driven by AI. Clarke emphasized that earlier industry estimates underestimated the scale of the AI market, which has grown beyond expectations.

Following the announcement, Dell’s shares rose 5.2% to $153.34 in New York trading. Shares of other AI server suppliers, including Super Micro Computer Inc. and Hewlett Packard Enterprise Co., also gained. Dell reiterated its quarterly and annual forecasts through fiscal year 2026 and pledged to increase its quarterly dividend by at least 10% annually through 2030.

Expanding AI Infrastructure and Managing Margins

Dell’s infrastructure solutions group has benefited from rising orders for AI servers from clients such as Elon Musk’s xAI, CoreWeave Inc., and several government entities, including the US Department of Energy. The company reported $5.6 billion in AI server orders during the fiscal second quarter, shipping $8.2 billion in servers and ending the quarter with a backlog of $11.7 billion.

The server business, however, faces challenges to its profitability. Clarke acknowledged that AI server operations currently generate mid-single-digit operating margins due to high component costs, particularly for advanced chips. Despite the narrow margins, he described the rate as sustainable. He emphasized opportunities to increase profitability by expanding sales to large enterprises and promoting complementary products, such as storage and networking systems.

The infrastructure unit’s operating margin stood at 8.8% in the second quarter, slightly below analyst expectations. Dell expects long-term annual revenue growth of 11% to 14% for this segment, compared with earlier estimates of 6% to 8%, underscoring its central role in the company’s AI strategy.

Reviving the Consumer PC Business

While Dell’s AI-related operations continue to expand, its client solutions group, which includes personal computers, faces ongoing pressure from competition with HP Inc. and Lenovo Group Ltd. Clarke, who recently took charge of the PC unit, outlined plans to improve performance in the consumer segment, which has lost market share since the pandemic.

The company aims to release new products tailored for a broader range of price points and focus on fast-growing markets, including the education sector. Clarke emphasized that Dell remains committed to restoring profitability in the PC business, describing scale and consumer engagement as vital to the company’s long-term success.

By strengthening both its AI infrastructure and consumer divisions, Dell aims to strike a balance between rapid innovation and stable profitability as it enters the next phase of growth.

Also Read: Dell Technologies Data Center Breakthroughs Power Smarter, Faster and More Secure Private Clouds

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