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Michael Dell said on Tuesday that the AI race is moving so fast it will eventually hit a ceiling. The Dell Technologies chief explained that demand for computing power is “tremendous,” but the nonstop building of artificial intelligence data centers cannot continue forever.
“I’m sure at some point there’ll be too many of these things built, but we don’t see any signs of that,” Michael said on CNBC’s “Closing Bell: Overtime.” For now, the surge is still alive, and his company is right in the middle of it.
The numbers back it up. The server networking business inside Dell jumped 58% in the past year and then another 69% in the last quarter alone, according to Michael.
Growth has been fueled by large language models that now stretch beyond text into multimodal and multi-agent systems, each one pulling more power from chips and infrastructure. That hunger is what keeps orders flowing.
Dell expands sales with Nvidia chips and big customers
Michael explained that the company’s AI servers are powered by Nvidia’s Blackwell Ultra chips.Those machines are then sold to heavy hitters like CoreWeave, a cloud service provider, and xAI, the startup run by Elon Musk.The stock market reacted quickly to this boom.
Dell shares rose more than 3% on Tuesday, right after the company raised its long-term growth outlook in front of analysts.
Michael lifted the company’s expected annual revenue growth to a range of 7% to 9%, up from the earlier 3% to 4% forecast.Diluted earnings per share are now expected to grow 15%, almost double the 8% previously targeted.
This followed strong second-quarter earnings in August. Looking further ahead, Michael said the company plans to ship $20 billion worth of AI servers in fiscal 2026, which is double last year’s figure.
But while sales are exploding, there’s a problem no one can ignore: power.
“It’s the clear constraint that we hear about from our customers, including OpenAI,” Michael said. “Many customers, in fact, will tell us, ‘Well, don’t deliver it until this day because we won’t have power in the building to support it.’”
Power supply questions loom over AI buildout
The scale of these projects is staggering. In September, OpenAI announced a partnership with Nvidia to build at least 10 gigawatts of data centers.
That equals the annual energy use of about 8 million U.S. households, based on analysis from CNBC using data from the Energy Information Administration. The largest tech names (Microsoft, Google, and Amazon) have also committed billions of dollars to new AI facilities.
Michael pointed out that while Dell can design servers to be as energy-efficient as possible, the reality is that these new projects will consume staggering amounts of electricity.
The concern is whether that energy even exists yet. Government data shows the U.S. grid is expected to add 63 gigawatts of capacity in 2025. The 10 gigawatts linked to OpenAI and Nvidia would eat up almost 16% of that total increase.
“At the end of the day, if you’re going to generate tens of trillions of tokens, and you’re going to create intelligence and drive the economy forward, you’re going to need computing power and energy,” Michael said.
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