Michael Dell is having a banner year.
His eponymous company is a key supplier in the data center buildout, selling Nvidia-based servers, racks, cooling and support to CoreWeave and xAI, while working with Nvidia, Google and OpenAI on systems that companies can use to run advanced software. Dell blew past revenue expectations last month, and Michael Dell’s net worth skyrocketed to $217 billion off the back of his company’s surging stock price, making him the fifth-richest person in the world..
But there’s a quieter story beneath the revenue growth: Dell’s gross margin dropped by 26% since the company first reported AI optimized server revenue at the end of February 2025, even as AI now brings in 10 times the revenue of laptops and computers.
The company acknowledged in its most recent earnings call that AI servers drove the 18.1% gross margin now that AI makes up 37% of Dell’s total revenue, suggesting that AI-optimized servers have lower gross margins than Dell’s traditional products. Analysts have been debating whether Dell selling more AI servers will lead to a durable source of profit or whether Dell is taking on a much bigger but lower-margin role as the company that packages expensive Nvidia-based systems for the AI buildout.
