Dell server sales soar by 80% as the company lures major AI customers away from Supermicro

Dell Technologies announced financial results for the second quarter of fiscal 2025, which ended August 2, 2024. The company’s revenue was $25.03 billion, exceeding the result of the same quarter in the previous fiscal year by 9%, as well as the consensus forecast of analysts surveyed by LSEG in the amount of $24.53 billion.

Net profit increased by 85% to $841 million from $455 million a year earlier. Earnings per share rose 86% from $0.63 to $1.17. Adjusted net income (Non-GAAP) per share increased 9% from $1.74 to $1.89, versus the consensus estimate of $1.71.

Photo: Michael Dell

The greatest growth in revenue was shown by the Infrastructure Solutions Group (ISG), which produces servers, storage systems and other equipment for the data center, which brought in revenue of $11.65 billion, exceeding the year-ago figure by 38%, as well as Wall Street analysts’ forecast of $10.44 billion

At the same time, the Servers and Networking segment, responsible for the supply of AI servers based on NVIDIA and AMD accelerators, as well as traditional servers, increased sales year-on-year by 80% – from $4.27 to $7.67 billion. Dell said that $3. $1 billion of that comes from sales of AI platforms, which totaled $1.7 billion in the previous quarter. According to Dell Chief Operating Officer Jeff Clarke, the company has a growing backlog of orders for AI servers to be fulfilled. Currently, their volume is about $3.8 billion.

Image source: Dell

Dell’s financial results came just hours after the release of a report from US investment research firm Hindenburg Research LLC that showed Dell is increasingly poaching customers from rivals in the server market such as Supermicro Computer Inc.

«Tesla purchased its servers exclusively from Supermicro, according to the Hindenburg report. “But recent reports in May 2024 and messages from Elon Musk indicate that Dell has now won large contracts with Tesla and xAI, which undermines Supermicro’s exclusivity.” The report also cites a post by Dell founder Michael Dell himself on social network X that he is helping Musk’s company train and support its popular chatbot Grok.

SiliconANGLE noted that Dell capitalized on NVIDIA CEO Jensen Huang’s statement earlier this year, when he said that if you were looking to buy server systems containing his company’s most powerful chips, your best bet would be to talk to Michael Dell .

At the same time, sales of storage systems of the ISG division fell by 5% to $3.97 billion. A drop in revenue of the Dell Client Solutions Group, which specializes in personal computers and laptops, was also recorded by 4% to $12.41 billion.

For the current quarter, Dell is forecasting revenue of $24 billion to $25 billion, close to StreetAccount analysts’ forecast of $24.6 billion. The company also revised down its revenue guidance for the full fiscal year 2025. It now stands at $95.5-$98.5 billion, down from $93.5-$97.5 billion previously. However, the midpoint is still below Wall Street’s forecast of $96.34 billion.

Dell shares rose 3% after the quarterly results were announced. Before this event, their growth since the beginning of the year was 48%, taking into account a drop of 34% since the announcement of the previous quarterly report.