Dell eyes stronger Q4 on surging AI server demand

Dell expects a stronger Q4 as AI server demand rises, forecasting sales of about US$31.5 billion, above the US$27.6 billion estimated.

It also projected Q4 earnings per share of US$3.50 versus US$3.21 expected.

Dell raised its full-year revenue guidance to US$111.7 billion from US$107 billion, with AI server shipments now expected to reach US$25 billion this year.

In fiscal Q3, Dell missed analyst revenue expectations, reporting US$27 billion versus the US$27.1 billion estimated, though adjusted earnings per share of US$2.59 beat the US$2.47 consensus.

Net income rose to US$1.5 billion from US$1.2 billion.

Its Infrastructure Solutions Group posted US$14.1 billion in sales, with server and networking revenue up 37% year-on-year to US$10.1 billion.

The PC business recorded US$12.5 billion in sales, up 3% but below forecasts.

🔗 Source: CNBC

🧠 Food for thought

Implications, context, and why it matters.

Dell’s AI server margins remain mid-single digit despite strong shipments and record orders

AI servers target mid-single-digit operating margins 1, below the fiscal Q3 Infrastructure Solutions Group (ISG) operating margin. TipRanks says pricing leeway is thin because 60% to 70% of a system’s cost sits in Nvidia GPUs 2.
Year to date, Dell shipped $15.6 billion of AI servers with full-year guidance near $25 billion 1. ISG posted 12.4% operating margin in fiscal Q3, up 360 basis points on a richer AI mix and stronger storage profits 1. Gross margin reached 21.1% 1. TipRanks had flagged a prior-quarter dip to 18.3% and earlier FY26 operating expense cuts from 16% to 12.3% 2. Operating expenses were 11.8% in fiscal Q3 1.

Data center operators speed up liquid cooling retrofits

Next-generation Nvidia servers can draw up to 240 kW per rack, per Forbes cited by CoreSite 3. Most air-cooled sites top out near 15 kW, which is pushing urgent upgrades as Dell’s AI server backlog reached $18.4 billion 1.
U.S. liquid cooling adoption is set to grow at a 21.6% Compound Annual Growth Rate (CAGR) through 2030 3, with penetration rising from about 10% in 2024 to over 20% in 2025 as Nvidia’s Blackwell platform (its next-generation GPU architecture) launches 4.
Operators rolling out modular liquid cooling in 2025 gain an edge for high-density AI work 5 3. Hyperscalers and top colocation providers are already designing liquid-ready sites 5 3.