- IA servers increase income but have much lower margins than traditional servers
- IA servers sales are enormously unpredictable, and revenues fluctuate greatly
- Companies such as Dell compensated for low margins with storage, networks and support
The high -performance computer market has long been a difficult space for manufacturers to generate profits, and this is even with the increase in the demand of AI servers.
In a new deep diving, The next platform He has examined the economy facing servers manufacturers such as Dell, Hewlett Pckard Enterprise and Lenovo, which shows that although these companies are aggressively pressing the implementations of the AI server, the real gains are obtained elsewhere.
The site informs that, although the offers of IA servers are increasing the total income of Dell and adding a certain gain, they are also reducing the general profitability per dollar obtained because the margins of profits on the AI servers are much lower than those of traditional servers and storage.
Unpredictable AI hardware sales
TNPTimothy Prickett Morgan points out: “Almost the entire margin of AI systems goes to NVIDIA for GPU, interconnections and, sometimes, CPU, as well as those who manufacture flash memory and storage for these AI systems. AMD is obtaining some margins, and eventually edge Networks and Cisco Systems will obtain their actions from the AI income and earnings cake, but it has not really happened yet. AMD is obtaining a skinny portion of GPU and CPU income from AI servers, and Intel has an even smaller portion of CPU income and profits. That’s all “.
Dell reported $ 2.1 billion in the AI server revenues for the fourth quarter of fiscal year 2025 that ended in January, below $ 2.9 billion in the previous quarter and significantly lower than the $ 3.1 billion recorded in the second quarter. This fluctuation highlights the unpredictable nature of IA hardware sales.
Despite the challenges, Dell said in a call to Wall Street analysts who hopes to generate at least $ 15 billion of AI servers in fiscal year 2026. Its accumulation of AI Server was $ 4.1 billion at the end of the fourth quarter, but a recent agreement of $ 4.9 billion with XAI, which we reported last month, immediately took it to $ 9 billion.
“IA servers have gross margins in the order of 5 percent. A combination of business servers consisting of large systems to execute ERP databases and databases, medium -range machines for medium -sized companies and less spacious boxes for small businesses have gross margins that are in the order of three times higher than this, ”writes Pricktt Morgan.
“The network and storage attached to these systems add more margin, and so does the installation, technical support and financing services. The latter is where companies such as Dell, HPE and Lenovo compensate for the fact that building the physical server is not worth it at all. ”
