Forget Hyperscalers: Why Dell's AI Server Business Just Keeps Growing

Core Viewpoint - Dell Technologies is experiencing significant growth driven by its AI-optimized server business, highlighted by a recent $5.8 billion contract with IREN to supply equipment for Microsoft's cloud services [1][2][4]. Group 1: Financial Performance - Dell's stock has risen nearly 40% in 2025, reflecting strong market performance [13]. - The company's market capitalization stands at $100 billion, with a current stock price of $149.18 [3]. - In the second quarter of fiscal 2026, Dell reported a revenue increase of 19% year over year, contributing to improved operating profit margins [9]. Group 2: AI Business Growth - Dell's backlog for AI-optimized servers has surged from $2.9 billion in the fiscal fourth quarter of 2024 to $11.7 billion in the fiscal second quarter of 2026, indicating robust demand [5][6]. - The demand for AI hardware products is outpacing supply, leading to increased revenue opportunities for Dell [7]. Group 3: Market Dynamics - The deal with IREN is part of a broader trend where hyperscalers like Microsoft are investing heavily in AI cloud infrastructure, which benefits hardware providers like Dell [10][12]. - Despite concerns about the return on investment for AI infrastructure spending, hyperscalers are likely to continue their investments due to previous expenditures, which may sustain demand for Dell's products [11].