Dell COO Jeff Clarke: 'Unprecedented Demand' For AI Spurs Record First Quarter Server Sales

Consumer PC sales dropped 19 percent year over year, however, and Clarke said the PC refresh is lagging previous refresh cycles.

Dell Technologies reported “unprecedented demand” for servers in its first quarter with $6.3 billion in server revenue – up 16 percent year over year – setting a new first-quarter record for server sales.

That helped fuel an overall 5 percent increase in company revenue for the fiscal 2026 first quarter ended May 2.

“This quarter we executed very well, achieving growth across our core markets and experiencing unprecedented demand for our AI optimized servers,” said Jeff Clarke, vice chairman and chief operating officer, during the first quarter earnings call Thursday. “We generated $12.1 billion in AI orders this quarter alone, surpassing the entirety of shipments in all of FY25 and leaving us with $14.4 billion in backlog.”

The company expects to ship $15 billion in AI servers this year. It shipped $1.8 billion worth of AI servers during the first quarter. But Clarke (pictured) said the road ahead is “lumpy and non-linear.”

“The customer deployments that we have in front of us are large. They're complex. They have very detailed schedule deliveries. There's lots of dependencies on this,” he said.
“We've talked about this business being lumpy and nonlinear. The dependencies in this business are waiting for data centers to be built, power to be provided, directly with cool infrastructure putting in place. We're orchestrating a highly complex supply chain.”

The number of enterprise customers grew quarter over quarter across industry verticals including financial services, manufacturing, media, entertainment and education, Clarke said. And in AI servers, the company’s enterprise business is growing faster than its cloud service provider (CSP) business, he said.

“Our execution continues to be a key differentiator,” Clarke said during the call. “We built a strong reputation for deploying large-scale clusters quickly and reliably, significantly reducing the time to first token and accelerating time-to-value for our customers. Beyond deployment, we provide ongoing comprehensive support, including managed services that ensure systems reliability and performance in customer data centers.”

Dell PC sales also grew during the quarter with revenue up 5 percent year over year to $12.5 billion as sales of the company’s commercial PC’s surged 9 percent year over year to $11 billion. Consumer PC sales dropped 19 percent year over year, however, and Clarke said the PC refresh is lagging previous refresh cycles.

Dell CFO Yvonne McGill said that while Dell saw strong demand for “richly configured, AI-ready devices” among small and mid-size businesses and large enterprise customers, the consumer market is not biting.

“In consumer, the demand environment remains soft and profitability remains challenged. We are focused on executing within CSG [Client Solutions Group], leveraging our leading go-to-market engine and broader portfolio of offerings to capture the PC refresh,” she said during the earnings call.

“All of our core businesses grew as we reached $23.4 billion in revenue in our first quarter, and non-GAAP EPS grew three times faster than revenue,” McGill said. “We generated record first-quarter cash flow from operations of $2.8 billion and returned $2.4 billion to shareholders, more than double our quarterly average since we started our capital allocation program in FY23.”

McGill said the Round Rock, Texas-headquartered company still expects annual sales for all of fiscal 2026 to come in between $101 billion and $105 billion. For the second quarter Dell expects revenue to come in between $28.5 and $29.5 billion, which would represent a 16 percent year-over-year gain.

For the fiscal 2026 first quarter (ended May 2, 2025) Dell reported revenue of $23.38 billion up 5 percent from $22.24 billion in the first quarter of fiscal 2025. Net income for the quarter was $965 million, down 3 percent from $992 million one year earlier.