Dell Technologies, the renowned PC manufacturer, has reported that its data centre equipment business has become its most profitable segment, with orders for AI servers surpassing $2 billion. While the company projects a modest 2.5% revenue increase from its PC division, it anticipates a substantial growth rate of around 7% in the division that sells servers, data storage, and related infrastructure.
The surge in demand for artificial intelligence (AI) is driving this growth, as AI requires more powerful machines, including servers equipped with graphics processors and high-capacity storage. Dell’s COO, Jeff Clarke, stated that AI is additive and will contribute to the overall increase in technology spending.
Dell’s backlog of orders for servers designed for AI use has exceeded $2 billion, indicating a strong demand for advanced computing solutions. However, the company faces challenges due to a shortage of high-power chips, which has affected the entire tech industry. The demand for servers and other hardware is currently outpacing supply.
Despite these challenges, Dell has raised its long-term profit growth forecast and plans to buy back more stock. The company aims for adjusted earnings per share to grow by at least 8% annually.
Michael Dell, the founder and CEO of Dell Technologies, affirmed the company’s commitment to remain publicly traded. This statement comes after Dell was ordered to pay over $6.4 million by Australia’s Competition and Consumer Commission (ACCC) for misleading pricing practices on its websites.
In August, Dell was found to have displayed strikethrough prices for monitors, giving customers the impression of greater savings. However, this pricing practice was deemed misleading by the ACCC and resulted in the fine.
These developments come in the wake of Dell’s global hiring slump, which saw the company announce job cuts of approximately 6,650 positions, accounting for 5% of its global workforce. The downturn in the personal computer market was cited as the reason for the layoffs.
Despite these challenges, Dell Technologies remains focused on its data centre segment, capitalizing on the growing demand for AI and positioning itself for further expansion in the technology market.