You're buying fat new servers to save energy and make room for AI hardware, claims Dell

But PCs and Nvidia are weak points, because you’re not buying one and can't buy the other

Dell believes its customers are consolidating server fleets to save energy and free up rack space for AI hardware – and has a giant jump in revenue to to prove it.

The hardware giant on Tuesday delivered [PDF] its Q3 2025 results. Its Infrastructure Solutions Group was the star, posting $11.1 billion revenue – a 34 percent year-on-year jump. Of that, $7.4 billion came from servers and networking kit – categories that saw a collective 58 percent year-on-year revenue improvement.

"Customers focused on consolidation and power efficiency by modernizing their datacenters, which frees up some volume – or space for AI infrastructure," CFO Yvonne McGill told investors on the earnings call. That modernization drive means customers are buying "more richly configured servers" that boast "denser core counts and more memory and storage per server."

Dell's also managed to improve the margin it makes on servers, which helped to produce Net Income of $1.1 billion on $24.35 billion revenue – increases of 12 and ten percent, respectively.

Nutanix thanks Dell for helping growth

Nutanix on Tuesday reported a profitable Q1 in which it won $591 million revenue – a 16 percent year-on-year-improvement that came from sales to new customers, the vast majority of which were outfits seeking an alternative to VMware.

CEO Rajiv Ramaswami said recently established relationships with Dell and Cisco helped to win new customers. Cisco's sales force proved particularly effective winning new customers, he observed.

Nutanix announced a major shift this year by allowing Dell's storage hardware to work with its hybrid cloud stack – an evolution from its hyperconverged approach of using software-defined storage and compute. Ramaswami predicted that collaboration will commence in the first half of 2025, and that Nutanix will "selectively support other storage arrays over time." He said doing so is a move towards "converged infrastructure" – combos of pre-integrated three-tier hardware that Nutanix made its name attacking with its software-defined stack. The CEO knows there's an irony in this shift, but conceded some customers just want to keep using the storage they already have or need external arrays for their own reasons.

Ramaswami said one dull spot in this quarter was sales to the US government, and suggested it's too early to comment on whether that will continue under the incoming Trump administration's cost-cutting policies.

Nutanix's most prized metric is Annual Recurring Revenue – the measure of how much customers have committed to paying it in future. In this quarter the biz counted $1.97 billion of it – up 18 percent year on year.

Q2 revenue was forecast to reach $635 to $645 million.

Yet the PC giant also lowered the midpoint its full-year revenue guidance from $97 billion to $96.1 billion, for two reasons.

One is that a long-expected PC refresh cycle sparked by Windows 10 end-of-life isn't happening.

"The PC refresh continues to move out," noted CEO Jeff Clarke. That was reflected in a one percent year-on-year revenue dip for Dell's Client Solutions Group, which won $12.1 billion of revenue. Of that, $10.1 billion came from commercial customers, who spent three percent more than in the same period last year. Clarke predicted "AI-driven hardware enhancements like battery life" will eventually spur buyers to open their wallets.

The other reason is that Dell doesn't know when it will have Nvidia's Blackwell part to sell, so it can't ship some servers. Clarke revealed the GB200 accelerator is already on backlog.

Not being able to ship Nvidia's latest gear also means associated storage, networking, and cooling product sales slowdown. Clarke assured investors once kit becomes available, Dell will cash in.

Investors didn't like this story. Dell's share price dived from around $142 to just over $127 in after-hours trading. ®