- IA servers increase income but have much lower margins than traditional servers
- AI servers sales are extremely unpredictable, with revenues fluctuating massively
- Companies like Dell compensate the margins of low AI with storage, networking and support
The high performance computer market has long been a difficult space for manufacturers to make a profit, and this is true even with the overvoltage of AI servers’ demand.
In a new deep dive, The next platform examined the economy in the face of servers of servers like Dell, Hewlett Packard Enterprise and Lenovo which show that if these companies aggressively push the deployments of AI servers, the real benefits are made elsewhere.
The site reports that although AI servers’ offers increase the total income from Dell and adding profits, they also reduce overall profitability by dollar gained because the beneficiary margins on AI servers are much lower than those of traditional servers and storage.
Sales of unpredictable AI equipment
TNPTimothy Prickett Morgan notes: “Almost the whole margin of the construction of AI systems goes to Nvidia for GPUs, interconnections and sometimes processors as well as for those who storage memory and flash for these AI systems. AMD gets margins, and finally Arista Networks and Cisco Systems will get their actions from AI Revenue and Profit Pie too, but that has not yet really happened. AMD obtains a lean gpu and processor of the IA servers, and Intel has an even smaller branch of income and profits from the processor. That’s almost everything.
Dell said $ 2.1 billion in IA server income for the fourth quarter of the 2025 financial year which ended in January, compared to $ 2.9 billion in the previous quarter and significantly lower than 3.1 billion dollars recorded in the second quarter. This fluctuation highlights the unpredictable nature of the sales of AI equipment.
Despite the challenges, Dell declared during an appeal to Wall Street analysts that he plans to generate at least $ 15 billion from IA servers during the 2026 fiscal year. His IA server backwards amounted to $ 4.1 billion at the end of the fourth quarter, but a recent 4.9 billion dollars agreement with XAI. Last months, immediately pushed $ 9 billion.
“AI servers have raw margins in the order of 5%. A mixture of corporate servers made up of major systems for the management of ERP systems and databases, mid -range machines for medium -sized companies, and less spacious boxes for small businesses have gross margins that are three times higher than that, “writes Prickett Morgan.
“The networking and storage attached to these systems add more margin, as are installation, technological support and financing services. The latter is the place where companies like Dell, Hpe and Lenovo compensate for the fact that the construction of the physical server is not worth much at all. »»
