Dell Technologies CEO Michael Dell said Tuesday that while the demand for computing power is “huge,” production of artificial intelligence data centers will eventually reach a plateau.
“At some point, we’re going to build too many of these things, and I don’t see any signs of that happening,” Dell said on “Closing Bell: Overtime.”
Dell said its server networking business grew 58% last year and 69% in the previous quarter. As large-scale language models evolve into more multimodal and multi-agent systems, the demand for AI processing power and capabilities continues to be strong.
Dell’s AI Server NvidiaBlackwell Ultra chip. The company then sells its devices to customers such as cloud service providers. coreweave and Elon Musk’s startup xAI.
Dell stock rose more than 3% on Tuesday after the company raised its long-term revenue and profit growth expectations at an analyst meeting.
The company has raised its expected annual sales growth rate to 7% to 9% from the previous target of 3% to 4%, and diluted earnings per share are expected to increase by 15% from the previous target of 8%.
The company reported strong second-quarter profits in August and said it plans to ship $20 billion worth of AI servers in fiscal 2026. This is double last year’s sales.
The demand for AI servers continues to skyrocket, but where exactly that power comes from remains a key question.
“This is a clear constraint that we hear from our customers, including OpenAI,” Dell said. “In fact, many customers will say, ‘Please don’t deliver until today because we don’t have the power in our building to support delivery.'”
In September, OpenAI announced a partnership with Nvidia to build at least 10 gigawatts of data centers. That’s roughly equivalent to the annual electricity consumption of 8 million U.S. households, according to a CNBC analysis of Energy Information Administration data.
like mega cap Microsoft, googleand Amazon Companies recently announced billions of dollars in allocations for AI data centers.
Dell said the company can design its servers to consume as little energy as possible, but these expensive investments will ultimately require large amounts of energy consumption, which may not yet be available.
According to EIA data, 63 gigawatts of power capacity will be added to the U.S. power grid in 2025. OpenAI and Nvidia’s 10 gigawatt boost will account for nearly 16% of the added energy.
“At the end of the day, if you’re going to generate trillions of tokens and generate intelligence to move the economy forward, you’re going to need computing power and energy,” Dell said.
Dell’s stock price chart from the beginning of the year to the present.
