Dell Technologies CEO Michael Dell said Tuesday that while demand for computing power is “tremendous,” the production of artificial intelligence data centers will eventually top out.
“I’m sure at some point there’ll be too many of these things built, but we don’t see any signs of that,” Dell said on “Closing Bell: Overtime.”
The hardware maker’s server networking business grew 58% last year and was up 69% last quarter, Dell said. As large language models have evolved to more multimodal and multi-agent systems, the demand for AI processing power and capacity has continued to be strong.
Dell’s AI servers are powered by Nvidia‘s Blackwell Ultra chips. The company then sells its devices to customers like cloud service provider CoreWeave and xAI, Elon Musk’s startup.
Dell shares rose over 3% Tuesday after increasing its expected long-term revenue and profit growth in an analyst meeting.
The computer maker raised its expected annual revenue growth to 7% to 9%, up from its previous target of 3% to 4%, with diluted earnings per share now expected to be 15% higher, up from its previous 8% target.
The company reported strong second-quarter earnings in August, and said it planned to ship $20 billion worth of AI servers in fiscal 2026. That is double what it sold last year.
Although demand for AI servers is continuing to surge, exactly where the power is going to come from remains an important question.
“It’s the clear constraint that we hear about from our customers, including OpenAI,” Dell said. “Many customers, in fact, will tell us, ‘Well, don’t deliver it until this day because we won’t have power in the building to support it.’ “
OpenAI announced a partnership with Nvidia in September to build at least 10 gigawatts of data centers. That roughly equals the annual power consumption of 8 million U.S. households, according to a CNBC analysis of data from the Energy Information Administration.
Megacaps like Microsoft, Google, and Amazon have all recently announced multi-billion-dollar allocations for AI data centers.
Although Dell said that the company can engineer the servers to use a little energy as possible, these lofty investments will ultimately require massive energy consumption that might not be available yet.
According to EIA data, 63 gigawatts of power capacity are expected to be added to the U.S. power grid in 2025. OpenAI and Nvidia’s 10 gigawatts buildout would account for nearly 16% of the added energy.
“At the end of the day, if you’re going to generate tens of trillions of tokens, and you’re going to create intelligence and drive the economy forward, you’re going to need computing power and energy,” Dell said.
Dell year-to-date stock chart.
