Dell Technologies: AI Orders Surge as Storage Growth Builds and Supply Tightens

Dell's AI infrastructure demand is accelerating: The company booked $6.1 billion in AI server GPU orders in fiscal Q2, matching the prior three quarters combined, while enterprise and neocloud pipelines continue to expand.

Growth is broadening beyond GPUs: Traditional server revenue rose 122% and storage grew 26% in Q2, with Dell expecting double-digit storage growth for the full year and a potentially record storage quarter ahead.

Supply constraints may worsen next year: DRAM, NAND and other AI-related components remain constrained, prompting customers to seek multiyear supply-access commitments; Dell expects margins to benefit from scale, storage mix and operating efficiency.

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Dell Technologies (NYSE:DELL) CFO David Kennedy told investors at Citi's TMT conference that the company sees continued demand for AI infrastructure, traditional servers and storage, supported by expanding customer pipelines and supply-access discussions extending multiple years.

Kennedy said Dell booked $6.1 billion of AI server GPU orders in its fiscal second quarter, matching the amount booked across the prior three quarters. Over the last 12 months, the company booked $13.2 billion in such orders, he said. Pipeline activity is multiples of backlog, according to Kennedy, with demand spanning neocloud providers, sovereign customers and enterprises. Enterprise demand is growing fastest by rate, while neocloud customers continue to represent larger dollar volumes.

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While AI GPU servers remain a significant driver, Kennedy said demand is broadening into traditional server infrastructure, inference workloads, security and resiliency. Dell reported 122% growth in traditional servers in its second quarter, he said, adding that every geography, customer segment and vertical grew at triple-digit rates.

Storage is also becoming an increasingly important part of the company's growth outlook. Kennedy cited 26% storage growth in the second quarter and said Dell has guided for double-digit storage growth for the full year. He said the company expects to add $2.5 billion in storage revenue during the year and described the coming quarter as potentially a record storage quarter for Dell.