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Dell AI Servers Reach 37% of Revenue After Earnings Beat, Gross Margin Falls 26%
Dell’s AI servers now generate 10 times the revenue of its consumer PC business and account for 37% of total sales. The shift has lowered overall gross margins even as the company exceeded revenue expectations last month.
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com reported. The company said in its most recent earnings call that these servers drove the margin figure after AI revenue first appeared in results at the end of February 2025. Gross margins have fallen 26% since that initial disclosure, even as AI products generate 10 times the revenue of Dell’s traditional laptop and desktop lines.
The company told investors in February 2025 that it expected AI servers to reduce the margin rate. Dell exceeded revenue expectations in the earnings report released last month. A company spokesperson said the AI business “has grown on top of a very strong core business” and that Dell aims to maintain gross margin rate stability in each line of business.
Dell supplies Nvidia-based servers, racks, cooling and support to CoreWeave and xAI. It also works with Nvidia, Google and OpenAI on systems for advanced software workloads. Michael Dell’s net worth reached $217 billion, placing him fifth among the world’s richest people, fortune.com reported.
Eighteen analysts currently hold buy ratings on the stock. Hewlett-Packard Enterprise has reported similar revenue gains from AI servers alongside margin pressure. Cisco has faced product margin compression from sales mix and higher memory costs.
New York University finance professor Aswath Damodaran told fortune.com that lower gross margins signal weaker unit economics that must be incorporated into Dell’s ongoing profitability outlook if the trend persists. Piper Sandler analyst James Fish said the margin impact becomes a concern only if growth stops adding gross profit dollars, a scenario he does not currently see.
