Dell Technologies 2025 Q1 Earnings: AI-Driven Growth & $93.5B-$97.5B Revenue Outlook
Discover how Dell Technologies is boosting its 2025 revenue forecast to $93.5B-$97.5B fueled by AI server demand and strong Q2 guidance surpassing analyst expectations.
After surpassing analyst revenue and earnings predictions for fiscal Q1 2024, Dell Technologies executives shared insights during the earnings call about the company’s optimistic outlook, profit margins, and expanding AI server backlog.
Elevated Full-Year 2024 Revenue Guidance and Strong Q2 Forecast
Dell raised its full-year revenue forecast to a range between $93.5 billion and $97.5 billion, up from the prior $91 billion to $95 billion estimate. CFO Yvonne McGill highlighted expected Q2 revenue between $23.5 billion and $24.5 billion, slightly exceeding analysts’ consensus.
The Infrastructure Solutions Group (ISG) segment is projected to grow over 20%, primarily driven by artificial intelligence adoption across industries.
AI Server Backlog Dominated by Nvidia Technology
COO Jeff Clarke emphasized that Dell’s AI server backlog is predominantly Nvidia-based, with improved availability of H100 GPUs and anticipation of increased H200 supply in the latter half of 2024. The new Nvidia Blackwell (B200) servers have entered production, although high demand continues to challenge supply chains.
Enterprise clients and major cloud providers contribute significantly to this growing backlog.
Margin Improvement Opportunities Ahead
Despite a 4% decline in gross margin year-over-year due to competitive pricing and a higher proportion of AI-optimized servers, Dell acknowledges opportunities to enhance margins in both traditional servers and storage products. CFO McGill attributes the first fiscal quarter as typically the weakest for ISG profitability but expects margin expansion driven by enterprise spending recovery and operational scaling.
Strategic AI Partnerships Fueling Momentum
Dell’s AI-focused server orders surged to $2.6 billion this quarter, a substantial increase from $800 million in the previous fiscal quarter, reflecting robust AI momentum.
Key partnerships with Nvidia, Meta Platforms, Microsoft, and Hugging Face strengthen Dell’s AI ecosystem, positioning the company as a leader in facilitating enterprise AI integration.
Following the earnings announcement, Dell’s stock experienced an 18.2% decline, closing at $139 in extended trading.
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