As a listener to the Dell Technologies ($DELL (+0.75%) ) for the fourth quarter of 2025, I was able to gain the following insights:
Jeff Clarke, COO & Vice Chairman, emphasized the successful execution of the company's strategy in a dynamic AI environment. Dell was able to increase growth while reducing operating expenses. Revenue for the full year 2025 amounted to USD 95.6 billion, an increase of 8%, with an operating profit of USD 8.5 billion. Dell's innovative strength was particularly emphasized, which is reflected in the expansion of the AI-optimized portfolio and the introduction of new products such as the PowerEdge XE9712.
Yvonne McGill, CFO, presented the financial details of the fourth quarter and emphasized the highlighted the strong profitability, particularly in the ISG (Infrastructure Solutions Group). Total revenue increased by 7% to 23.9 billion US dollars, driven by growth in the server segment. Operating profit increased by 22% to USD 2.7 billion, mainly due to higher sales and lower operating expenses.
Management expects further growth above the long-term value creation framework for the 2025 financial year. Sales are expected to be between USD 101 and 105 billion, which corresponds to an increase of 8%. Growth is expected to be driven primarily by AI server shipments of USD 15 billion and further growth in the traditional server and storage business.
In the subsequent Q&A portion of the conference, analysts asked questions about Dell's results and outlook.
Wamsi Mohan from Bank of America asked about the assumptions underlying the outlook for fiscal 2026, particularly with regard to margins and share buybacks. Yvonne McGill explained that the company expects high single-digit growth, driven by AI servers and traditional servers and storage. She also emphasized the efficiency gains that will lead to lower operating expenses.
Erik Woodring from Morgan Stanley addressed the risks posed by ODM competitors in the AI server market. Jeff Clarke replied that Dell differentiates itself through customized solutions, engineering expertise, services and global presence.
Simon Leopold from Raymond James inquired about Dell's Dell's involvement in the US government and the impact of possible budget cuts. Yvonne McGill and Jeff Clarke emphasized that Dell is active in over 170 countries and has the ability to compensate for fluctuations in demand in individual segments.
Aaron Rakers from Wells Fargo asked about the margins associated with Blackwell products and the opportunities for margin improvement. Jeff Clarke explained that margins on Blackwell products are lower than on Hopper products, but Dell is working to add value through engineering, supply chain management and the addition of networking and storage solutions.
Ben Reitzes from Melius Research asked about the impact of tariffs, especially in the context of China. Jeff Clarke responded that the recent announcements are not yet reflected in the outlook, but Dell has a globally diversified and agile supply chain to minimize the impact.
David Vogt from UBS asked about the growth in the growth in the traditional server and storage business. Yvonne McGill reiterated the expectation of growth across the ISG portfolio. Jeff Clarke explained the shift to Dell IP storage and consolidation in the server area.
Matthew Niknam from Deutsche Bank addressed the expectations for an acceleration of growth in the CSG sector and the realization of a PC refresh wave. Jeff Clarke cited several reasons for such a refresh wave, including the end of Windows 10 support and the availability of new AI PCs.
Samik Chatterjee from JPMorgan asked about the supply chain constraints in connection with the expected AI server sales of 15 billion US dollars. Jeff Clarke emphasized that supply chain is not an issue and Dell is pursuing all opportunities in the CSP and enterprise space.
In summary, Dell Technologies had a strong fourth quarter and a successful fiscal year 2024. The company is well positioned to capitalize on growth opportunities in the AI market while increasing profitability. Management was optimistic about the future and reiterated its commitment to creating value for shareholders.
