GPU-powered systems are not for the “faint-hearted” Dell’s vice chairman and COO warned yesterday as the firm announced first quarter results that were swollen by accelerating demand for NVIDIA-packed AI servers.
Jeff Clarke also shrugged off the effect of the US government’s tariffs regime in the quarter, while confirming that some customers had pulled purchases forward.
Overall net revenue for the first quarter ending May 2 came in at $23.4 billion, up 5 percent on the year. Net income slipped 3 percent to $965 million.
It was the vendor’s Infrastructure Solutions Group that did the heavy lifting for the quarter, with servers and networking revenue growing 16 percent to $6.3bn, while storage grew 6 percent to $4bn. Overall ISG operating income was up 36 percent to $998m.
At the Client Solutions Group, commercial revenues climbed 9 percent to $11bn, but consumer sales slid 19 percent to $1.5bn. This dragged operating income at the business down 16 percent to $653.
Clarke said the firm had experienced “exceptionally strong” demand for AI-optimized servers.
“We built $12.1 billion in orders in the first quarter, surpassing the entirety of shipments in all of FY 2025,” he said. “We shipped $1.8 billion, leaving us with a backlog of $14.4 billion.”
Hyperscalers are sucking up tremendous amounts of kit, but Clarke said “Enterprise AI customers grew again sequentially with good representation across key industry verticals, including Web Tech, Financial Services Industry, Manufacturing, Media & Entertainment and Education.”
He told analysts that the “backlog is primarily Blackwell and it has a combination of GB or Arm-based Blackwell with x86 Blackwell.”
He described such systems as “not for the faint-hearted”, while more broadly, “The custom design nature in some of these very large deployments are unique, pushing the envelope.”
And, Clarke added, “Blackwell challenges many engineering principles. We think we're working our way through them.”
At least these are relatively known challenges, with NVIDIA laying out an aggressive roadmap for future chip generations.
US companies have become wary of saying too much about President Trump’s on/off, up/down tariff strategy lest they attract a dressing down or worse from the White House.
Pressed by analysts, Clarke confirmed the firm “certainly had some customers pulling demand [forward]. They certainly saw what was happening in the marketplace and how dynamic things were. And there's no way to say that that didn't happen.”
He said Dell had “weathered” the impact of tariffs and did not raise list prices in its CSG unit. “We saw an actual increase of AI PCs as we're ramping our new products to help us stabilize our ASPs.”
He added, “If I move over to ISG, again, large deals, large customers, they're aggressive. It's not different. It's always been the case. It continues to be the case. There might have been a slight increase of some of more aggressive deals, but nothing really to write home about.”
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