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

Dell Technologies sees continued demand for AI infrastructure, traditional servers and storage, supported by expanding customer pipelines and supply-access discussions extending multiple years. 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. Pipeline activity is multiples of backlog, 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.

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

Storage is also becoming an increasingly important part of the company’s growth outlook. Dell cited 26% storage growth in the second quarter and has guided for double-digit storage growth for the full year. 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.

Dell’s own storage intellectual-property portfolio is contributing to higher average selling prices and margins. PowerStore recorded its 10th consecutive quarter of double-digit growth, as well as PowerScale and ObjectScale products, which have posted multiple consecutive quarters of growth. Project Lightning remains a small and nonmaterial part of current financial results, though it is being tested by some of Dell’s largest customers.

Dell continues to face demand that exceeds supply for both AI and traditional servers. The company’s second-half outlook is described as “realistic,” citing improved visibility into components, customer requirements and data-center readiness. Looking into next year, however, Dell expects the supply-demand imbalance to worsen rather than improve. DRAM and NAND are the largest constrained components, while CPUs, opticals, transceivers, T-glass and other components used in AI systems are also constrained.