Dive Brief:
- Dell and Hewlett Packard Enterprise got revenue boosts from growing enterprise demand for AI-optimized servers despite the economic uncertainty raised by U.S. tariffs in the first half of the year, executives from both companies said during recent earnings calls.
- “We have shipped more AI servers in the first half of this year than all of last,” COO Jeff Clarke said during Dell’s Q2 2026 earnings call last week. The vendor saw year-over-year revenues grow 19% to a record $29.8 billion for the three months ending Aug. 1. Dell’s server and networking segment revenues reached record highs, rising 69% to $12.9 billion, CFO Yvonne McGill said.
- HPE rode a similar wave of increased AI hardware demand. The company saw revenues grow 18% year over year to $9.1 billion during Q3 of its 2025 fiscal year, which ended July 31. “Customers are refreshing aged infrastructure with more richly configured servers,” HPE CEO Antonio Neri said during a Wednesday earnings call.
Dive Insight:
While cloud providers and model builders generated initial bursts of heightened demand for AI hardware, enterprises entered an upgrade phase earlier this year.
Server sales saw an unprecedented sales spike during the first three months of 2025, increasing 134% year over year to $95.2 billion, according to IDC data. It was the largest quarterly growth the market has experienced in 25 years, the analyst firm said.
“The evolution from simple chatbots to reasoning models to agentic AI will require several orders of magnitude more processing capacity, especially for inferencing,” Kuba Stolarski, research VP for worldwide infrastructure research at IDC, said in the June report.
Gartner expects end-user spending on servers to grow to $367 billion this year, marking a nearly 60% spike compared to 2024. The growth spurt is tied to high investment levels in AI hardware — including servers.
"Data centers are experiencing a surge driven by Gen AI, with spending on AI optimized servers, which was virtually nonexistent in 2021, expected to triple that of traditional servers by 2027,” John-David Lovelock, Gartner distinguished VP analyst, said in a July IT spending forecast report.
Cloud providers were the largest driver of data center investments last year, according to Dell’Oro Group research. The 10 largest hyperscalers accounted for more than half of $455 billion spent on infrastructure in 2024, as the total market grew 51% year over year, the firm said in March.
The mix is shifting as enterprises move generative AI pilots into production and weigh the security risks of feeding sensitive data into public cloud environments. More than half of organizations are grappling with data security hurdles on the road to AI adoption, the Ponemon Institute found in an August study commissioned by OpenText.
HPE has seen enterprise server procurements grow year over year every quarter since the beginning of its 2024 fiscal year, which ended Jan. 31 2024, Neri said Wednesday.
The company reported $4.9 billion in server segment revenue, a 16% increase over the same period last year and 21% bump over the prior quarter. AI systems generated $1.6 billion in revenue during the quarter, Neri said. HPE added its Nvidia GPU-powered ProLiant Compute Gen12 servers to an AI-ready private cloud suite in June.
Dell expects AI workload requirements to help drive an enterprise server refresh in the coming year. The company targeted enterprise customers with the rollout of GPU-powered servers for rack and data center deployments in May.
“We're replacing old servers with more efficient new servers,” Clarke said, noting that 70% of the currently installed base is running on legacy hardware.
