Dell: Increasing Demand for AI Servers - Server and Network Revenues Skyrocket by 80%
Dell Technologies published its results for the second quarter of the 2025 financial year on Thursday, August 29, reporting revenue of around $25 billion - an increase of 9% compared to the previous year. According to LSEG data, analysts had expected revenue of $24.14 billion, the Reuters news agency commented on the figures. Diluted earnings per share (non-GAAP) amounted to $ 1.89, which also exceeded the group's expectations of $ 1.71 (data on analysts' expectations according to Reuters).
In Q2, combined ISG and CSG revenue totaled $24.1 billion, representing 12% year-over-year growth and positioning the company well for the second half of the year and beyond, commented Dell CFO Yvonne McGill.
Demand for AI and traditional servers on the rise
The Infrastructure Solutions Group (ISG) achieved record sales of $11.65 billion in the reporting period - 38% more than in the previous year. According to CNBC, the division is the company's fastest growing area. Server and networking revenue rose to a record $7.7 billion, an increase of 80%. This growth was due to increasing demand for AI and traditional servers.
The "AI momentum" accelerated in Q2 and the company is seeing an increase in enterprise customers purchasing AI solutions each quarter, said Jeff Clarke, vice chairman and chief operating officer of Dell Technologies. Demand for AI-optimized servers was $3.2 billion, according to Clarke. He also referred to an order backlog of $3.8 billion. In the earnings call, Clarke emphasized that the pipeline for AI servers had grown again in Q2 for both Tier 2 CSPs and enterprises and was now several times larger than the order backlog. The enterprise segment remains a significant opportunity for the Group as many companies are still in the early stages of AI adoption, Clarke said. The COO also highlighted the emerging opportunity in the area of "Sovereign AI".
The Client Solutions Group (CSG) generated revenue of $12.4 billion, a decrease of 4% compared to the previous year. Revenue in the commercial client segment remained unchanged at $10.6 billion, while the consumer segment shrank by 22% to $1.9 billion.
Dell becomes more optimistic for the full year
Dell has also raised its full-year forecast for revenue and profit. The indicators point to further growth in the second half of the year, it said during the earnings call. Against this backdrop, the group expects revenue in the 2025 financial year to be between $95.5 billion and $98.5 billion, with a midpoint of $97 billion or growth of 10%. ISG's revenue is expected to grow by about 30%, driven by AI and continued momentum in the traditional server business, it added. Non-GAAP diluted EPS is expected at $7.80, plus or minus $0.25, and is expected to rise 9% at the midpoint.
Group loses market share in PC shipments
Dell lost market share in PC shipments in key markets in the second quarter, Reuters quoted Mikako Kitagawa, Director Analyst at Gartner. It was the leading supplier in the US business market, but its competitors had shown more growth and gained more share than a year ago, it added.