Dive Brief:
- Dell Technologies’ revenue soared in the first quarter of its fiscal 2027, driven by enterprise investments in AI infrastructure and compute power. The technology company’s revenue reached $43.8 billion for the quarter, up 88% year over year.
- AI was a powerful driver behind Dell’s record quarter. The company booked $24.4 billion in AI orders and saw $16.1 billion of AI-optimized server revenue. Meanwhile, traditional server and networking revenue also surged to $8.5 billion, a 92% increase year over year.
- “The majority of demand was driven by large enterprise customers refreshing their compute environments and expanding capacities to support growing workloads,” Dell COO Jeff Clarke said, referring to traditional servers during the company’s earnings call on Thursday. “For many large customers, ensuring compute availability to modernize and grow remains their highest priority.”
Dive Insight:
Dell is among a growing cohort of technology vendors reaping the rewards of AI infrastructure investments as enterprises secure supply in support of workloads.
Nvidia, a key infrastructure player, reported earlier this month that its revenue jumped 85% in the first quarter of its fiscal 2027 due to infrastructure demand. Meanwhile, Microsoft, Google and AWS are funneling significant amounts of money into building out critical pieces of AI infrastructure, including data centers and chips, alongside rising enterprise demand.
Together, the three major hyperscalers have shared plans to invest more than half a trillion dollars in capital expenditures for AI infrastructure this fiscal year while enterprises are expected to more than double spending on AI agents and generative AI models.
On top of the need to support AI workloads, concerns about memory chip shortages are pushing customers to lock down compute power, a trend Dell expects to continue throughout its fiscal year.
“We saw AI inference workloads driving incremental demand for traditional compute,” Clarke said during the earnings call. “The memory uncertainty is driving customers to proactively secure access to infrastructure across both traditional and AI workloads over longer periods of time.”
Dell raised prices and tightened discounts during its last quarter in response to industrywide memory chip shortages. Yet customers continued to invest in “AI infrastructure, modernizing compute, expanding storage and refreshing PCs to support the next wave of workloads,” Clarke said Thursday. He added that Dell’s customer count surpassed 5,000 with growth across neocloud, sovereign and enterprise customers.
During the earnings call, Clarke said Dell marked the two-year anniversary of its Dell AI Factory with Nvidia this quarter. Clarke also noted the introduction of new infrastructure across Nvidia’s Vera Rubin rack scale platform and GPU architecture to further scale the Dell AI Factory, a customizable AI platform designed to support enterprise deployment of AI.
Clarke said Dell is continuing to expand the Dell AI Factory ecosystem with partners including Nvidia, OpenAI and Google Cloud, with a focus on bringing AI to enterprise data on premises. With Google Distributed Cloud as a partner, for example, Gemini models operate on premises, running AI closer to enterprise data to meet data privacy and sovereignty requirements, he said.
