Dell said its AI server backlog had swollen to $9bn and it was banking on enterprises buying into AI-enabled servers and PCs when it unveiled its fourth quarter numbers yesterday.
At the same time, it will turn to AI to help it navigate the turbulent business environment created by the Trump administration’s war on government spending and obsession with trade tariffs.
The Texas-based PC market announced a 7% rise in revenues to $23.9bn for the fourth quarter ending January 31, generating net income of $1.5bn, up 27% on the year. For the full year, revenues were $95.6bn, up 8% with net income of $4.6bn, up 36%.
CEO Jeff Clarke said the firm was “well positioned to capture growth across every segment of our business.”
But, inevitably, it was its AI efforts that dominated his presentation to analysts, with AI orders of “$1.7 billion with $2.1 billion in shipments in order with $4.1 billion in backlog as customers work through technology changes.”
This has tipped into the current quarter as “Our partnership with xAI and other customers continued. We booked deals putting our AI backlog at roughly $9 billion as of today.”
The likes of xAI are one thing. But Clarke said “We are seeing continued progress in AI from enterprise customers, albeit still earlier in their journey with sequential growth in both orders and customers.”
Clarke said the total AI hardware and services TAM had nearly doubled over the course of the year to $295 billion in 2027, growing at a 33% CAGR.
He said Dell’s “engineering services, financing and ability to optimize density and performance per watt are important differentiators for the largest at-scale CSPs” but also meant it could provide “very efficient enterprise solutions.”
“If we take the work that we're doing in these large clusters, it really scales nicely to the enterprise. It allows us to really take the efficiencies and learnings from what we're doing with the largest clusters in the world and build optimized solutions for very specific domain-specific AI use cases.”
And, he said, “Our experience to date is the AI margins in enterprise are better, and I think they'll continue to be, and that's what we're focusing on.
Clark also pointed to the long awaited AI PC market. “Consistent with what we saw coming out of Q3, customers are waiting to refresh to buy AI PCs that future-proof their purchases going forward.”
The AI PC has been something of a unicorn so far. However, Clarke noted that there are still a massive 500 million Windows 10 devices out there that cannot run Windows 11, meaning the age of the AI PC will hit us by default.
“We made reference that SMB for us had strength,” he said. “That's always an indicator that things are beginning to move.”
Clarke and CFO Yvonne McGill made much of the “tailwinds” behind the business, which should see it hit $103bn of revenue this year.
However, analysts were curious how it would deal with the Trump administration’s slash and burn approach to government spending, and its plans for tariffs and likely tit for tat actions by other governments.
On Federal spending, Clarke said, there been drives to cut government spending in the past, which Dell have been able to “navigate… pretty successfully.”
“Our underlying belief is United States government will need technology. AI plays a pretty significant role in our nation. And I think the demand will materialize. We'll get through whatever is happening today.
When it came to tariffs, he said the firm had build a global, resilient, diverse supply chain that should help minimise the impact to both shareholders and customers.
And it would turn to, guess what, AI to help.
“We've taken our digital supply chain, our digital twins actually using some AI modelling to look at every possible scenario that you might imagine of this country, that country restrictions here, awaits here.”
But AI can only get you so far, Clarke confirmed. “And whatever tariff we cannot mitigate, we view that as an input cost. And as our input costs go up, it may require us to adjust prices.”
