- AI servers increase revenue but have much lower margins than traditional servers
- Sales of AI -server is extremely unpredictable, with turnover swinging massive
- Businesses like Dell Offset Low AI margins with storage, network and support
The market with high-performance computing has long been a tough space for producers to make a profit, and this is the case, even with the increase in demand for AI servers.
In a new depth of the depths, The next platform has examined the economy that server manufacturers face as Dell, Hewlett Packard Enterprise and Lenovo, which shows that although these companies are aggressively pushing AI server installations, the real profits are made elsewhere.
The site reports that although AI server agreements increase them as Dell’s total income and add some profit, they also reduce the total profitability per year. Dollars earned because the profit margins on AI servers are much lower than those on traditional servers and storage.
Unpredictable AI -hardware sales
TnpTimothy Prickett Morgan notes, “Almost all the margins to build AI systems go to NVIDIA for GPUs, interconnections and sometimes CPUs, as well as for those that manufacture memory and flash storage for these AI systems. AMD gets some margins, and in the end, Arista Networks and Cisco Systems will get their shares in the AI revenue and merit pai, but it hasn’t really happened yet. AMD gets a thin selection of GPU and CPU income from AI servers, and Intel has an even tinier slice CPU revenue and profit. It’s about that. “
Dell reported $ 2.1 billion in AI server revenue for the fourth quarter of the 2025 financial year, which ended in January, down from $ 2.9 billion in the previous quarter and significantly lower than the $ 3.1 billion recorded in the age of two. This fluctuation highlights the unpredictable nature of AI -hardwaresales.
Despite the challenges, Dell said in a call to Wall Street analysts that it expects to generate at least $ 15 billion from AI servers in the financial year 2026. Its AI -server -backlog amounted to $ 4.1 billion at the end of 4. quarter, but a recent $ 4.9 billion mentioned Xai, which we reported last month, immediately pushed it to $ 9 billion.
“AI servers have gross margins in the order of 5 percent. A mix of corporate servers consisting of large systems for running ERP systems and databases, medium-sized machines for medium-sized businesses, and smaller spacious boxes for small businesses have gross margins that are in the order of three times higher than this, ”writes Prickett Morgan.
“Networking and storage associated with these systems add more margin, and so does installation, technical support and financing services. The latter is where companies like Dell, HPE and Lenovo compensate for the fact that building the physical server is not worth much at all. “
