Dell Technologies, known for its PCs, has claimed its data centre equipment business is now its most lucrative segment.
While the company expects a modest long-term revenue increase of around 2.5% from PCs, it anticipates significant growth of around 7% in the division that sells servers, data storage, and related infrastructure, the company told investors on Thursday.
The growing interest in artificial intelligence (AI) is the driving force behind the growth as it requires more powerful machines, including servers with graphics processors and high-capacity storage.
“AI is additive, it’s going to grow overall technology spend,” Dell COO Jeff Clarke said.
Dell has reported having more than $2bn in backlogged orders for servers designed for AI use.
Despite the positive outlook, Dell faces challenges related to a shortage of high-power chips, which is affecting the entire tech industry. The demand for servers and other hardware is outpacing supply.
Dell has also increased its long-term profit growth forecast and plans to buy back more stock. It aims for adjusted earnings per share to grow by at least 8% annually.
Michael Dell, the company’s founder and CEO, affirmed that Dell Technologies intends to remain a publicly traded company.
In August, Dell was ordered to pay over $6.4m by Australia’s Competition and Consumer Commission (ACCC) for misleading “strikethrough prices” that appeared on its websites from August 2019 to December 2021.
According to court documents, Dell allegedly displayed a higher price for monitors in strikethrough form to mislead customers into thinking they were saving more money by buying from the company.
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This ruling came amid Dell’s global hiring slump which saw the company announce in February that it was cutting about 6,650 jobs, 5% of its global workforce, due to the downturn in the personal computer market.