Dell Doubles Long-Term Revenue Growth Outlook on Strong AI Demand

TMTPOST -- Dell Technologies stock jumped as much as 6.1% and closed 3.5% higher on Tuesday. Shares extended their two-day rally to 7.2% and hit highest close in a year after the company substantially lifted its long-term top and bottom line outlook, highlighting strong demand for servers powering artificial intelligence (AI) workloads.

Credit：Dell

Dell more than doubled its revenue growth expectation for the next four years, and earnings per share (EPS) growth guidance nearly doubled for the same period. Dell saw annual revenue from the fiscal year 2027 starting next March to the fiscal 2030 to expand between 7% and 9%, up from the previous target of 3% to 4%, according to the long-term financial framework the company disclosed during its Securities Analyst Meeting on Tuesday.

Dell said it has nearly doubled non-GAAP diluted EPS over the past five years and expects to double it again, targeting at least 15% of non-GAAP diluted EPS growth, compared with the prior growth forecast for 8% or higher.

The Round Rock, Texas-based company reiterate its target of returning over 80% of adjusted free cash flow to shareholders via share repurchases and dividends. It extended its commitment to increase its quarterly dividend by 10% or more annually through fiscal 2030.

Dell has returned $14.5 billion to shareholders since its dividend program began in fiscal 2023, and has roughly doubled EPS over the past five years, said roughly doubled EPS, said, David Kennedy, interim Chief Financial Officer.

Dell in a statement said it is capitalizing on the unprecedented pace of change in technology, especially in AI, and is well positioned with a leading portfolio from data center infrastructure to personal computers (PCs).

THe Chief Operating Officer Jeff Clarke suggested the guidance hike resulted from the company’s undervaluation of AI demand in 2023.“We were all wrong how big we thought the AI market was two years ago, and it’s nothing but bigger,” he said.

“Customers are hungry for AI and the compute, storage and networking we provide to deploy intelligence at scale. We’re successfully translating that demand into growth and strong cash flow that we’ve largely returned to shareholders,” said chairman and CEO Michael Dell. “As AI continues to expand into businesses and governments around the world, the opportunity ahead is massive.”

Dell on Tuesday also reconfirmed its financial guidance for fiscal 2026 Q3 and full year that was provided on August 28.

Dell’s revenue and EPS beat Wall Street anticipation for its second fiscal quarter ended August 1. It raised the full year outlook for revenue to be $107 billion at its midpoint and diluted EPS to $9.55 at the midpoint, better than analysts estimated $104.6 billion and $9.38 per share.

Dell’s EPS guidance for the third fiscal quarter of $2.45 fell short of expected $2.55, though its revenue forecast of $27 billion topped estimated $26.1 billion. Dell said that part of the reason its profit forecast is concentrated in the fourth quarter of 2025 is due to seasonality, particularly in its storage business.

Dell’s updated annual guidance may ease investor concerns about the margin squeeze from competition in AI servers and the high costs of building the products. Dell is one of Nvidia Corp.’s key customers. Dell buys chips from the AI chip giant and builds computers around them, which it sells to end-users such as Elon Musk’s startup xAI and CoreWeave, a cloud service.

Dell in the financial report on August 28 disclosed it shipped $10 billion in AI servers in its past two quarters. It said it plans to ship $20 billion of AI servers in the fiscal year 2026, double what it sold in the previous year.