AI server demand boosts Dell Technologies, Inc. Class C technology (DELL.US) Q3 revenue to a new high, raises full-year performance guidance.

Dell Technologies, Inc. Class C Technology (DELL.US) raised its forecast for the key artificial intelligence (AI) server market, indicating a strong demand for such machines against the backdrop of the current data center boom. As of the time of writing, Dell Technologies, Inc. Class C Technology's stock rose nearly 4% in after-hours trading on Tuesday. The financial report for the third quarter of the 2026 fiscal year released by Dell Technologies, Inc. Class C Technology showed that the company's quarterly revenue increased by 11% year-on-year to $27.05 billion, reaching a historical high but falling short of analysts' general expectation of $27.2 billion. Operating profit under Non-GAAP accounting standards was $2.503 billion, an 11% increase year-on-year; net profit was $1.762 billion, an 11% increase year-on-year. Adjusted earnings per share were $2.59, better than the general analyst expectation of $2.48. By segment, the Infrastructure Solutions Group (ISG) revenue was $14.107 billion, a 24% year-on-year increase. Among them, server and networking business revenue increased by 37% year-on-year to a record high of $10.125 billion. Customer Solutions Group (CSG) revenue was $12.478 billion, a 3% year-on-year increase. Dell Technologies, Inc. Class C Technology stated that in the third quarter, the company received $12.3 billion in orders for AI servers, shipped $5.6 billion worth of AI servers, and had a backlog of orders worth $18.4 billion at the end of the quarter. The company also raised its full-year AI server shipment forecast from $20 billion to $25 billion, a year-on-year increase of over 150%. Driven by unprecedented AI data center and workload expenditures, demand for machines manufactured by companies such as Dell Technologies, Inc. Class C Technology, Super Micro Computer, Inc. (SMCI.US), and Hewlett Packard Enterprise Co. (HPE.US) with powerful chips capable of training and running AI models continues to rise. In October of this year, Dell Technologies, Inc. Class C Technology nearly doubled its revenue and profit growth expectations for the next four years and stated that the demand for AI products would drive this high growth expectation to at least the 2030 fiscal year. However, winning and fulfilling these orders has also resulted in higher costs for Dell Technologies, Inc. Class C Technology, as the company is working to increase the profit margin of its AI server business. The operating profit margin of the Infrastructure Solutions Group, which includes server and network sales, in the third quarter was 12.4%, better than the general analyst expectation of 11.2%. Dell Technologies, Inc. Class C Technology's Chief Operating Officer, Jeff Clarke, stated during a conference call after the financial report release that the cost of memory chips for servers and personal computers is rising at a rate far faster than typical levels. He said, "We will do everything we can to minimize the impact. But the fact is, the cost basis for all products is rising. There are no exceptions." The company's gross profit margin in the third quarter was 21.1%, better than the general analyst expectation of 20.4%. Additionally, Dell Technologies, Inc. Class C Technology returned $1.6 billion to shareholders in the third quarter through stock buybacks and dividends. So far this year, the company has returned $5.3 billion to shareholders and repurchased over 39 million shares. Looking ahead, Dell Technologies, Inc. Class C Technology expects full-year revenue for the 2026 fiscal year to be between $111.2 billion and $112.2 billion, with a median forecast of $111.7 billion (a year-on-year increase of 17%), better than the previous expectation of $107 billion; adjusted earnings per share for the full year are expected to be $9.92 (a year-on-year increase of 22%), better than the previous expectation of $9.55.