Dell Technologies is raising its annual revenue growth forecast to between 7% and 9%, up from 3% to 4%, driven by strong demand for its expanding AI infrastructure business.

The company's ability to deliver integrated, high-performance AI infrastructure solutions at scale, supported by a robust supply chain and global service network, positions it as a leader in the AI hardware market, with a backlog of $11.7 billion in AI server orders at the end of the second quarter of fiscal year 2026.

Since the start of the year, Dell's stock has risen approximately 18.4%, trading near its 52-week high of $144.21, reflecting market confidence in its growth prospects.

Dell has returned about $14.5 billion to shareholders through dividends and share repurchases since fiscal year 2023, and expects to continue delivering strong shareholder value aligned with its updated financial targets.

Despite the optimism, the industry faces challenges such as energy consumption, data privacy, supply chain sustainability, and talent shortages, which are critical as AI hardware becomes more advanced and software-defined infrastructure gains prominence.

Emerging AI applications like real-time multimodal AI, autonomous systems, personalized experiences, and large-scale AI factories are expanding, but they also highlight ongoing issues like energy use and talent gaps.

PCs are expected to play a significant role in edge AI applications, complementing the growth in AI infrastructure.

Dell's traditional PC business faces challenges, especially in low-end and midrange markets, prompting the company to introduce new products and focus on growth in education and emerging markets.

This shift reflects a broader industry trend where AI is becoming central to enterprise applications, driving innovation across semiconductors, data centers, and energy management.

While demand for AI servers boosts sales, the high deployment costs are impacting profit margins, with Dell noting mid-single digit operating margins are acceptable at this stage.

Dell anticipates AI inference will be a key growth driver, especially as enterprises adopt low-cost inference at the edge and disaggregated architectures.

Although Dell's stock has experienced volatility with multiple large moves over the past year, today’s rise indicates the market views its AI sector growth as meaningful but not yet transformative.

Dell is modernizing its data centers with next-generation servers and storage solutions to maintain a competitive edge in the evolving AI landscape.