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(Bloomberg) -- Dell Technologies Inc. gave a strong outlook for sales of servers optimized for artificial intelligence, though investors remained concerned about the profitability of these products.

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For the year ending in January 2026, Dell expects to ship $15 billion worth of AI servers. That’s roughly a 50% jump over the $9.8 billion it shipped in the fiscal year that ended Jan. 31.

The need for computing to run AI tools has led to a boom for makers of high-powered servers like Dell, Super Micro Computer Inc. and Hewlett Packard Enterprise Co. Dell’s backlog for AI servers jumped to $9 billion after the end of the fourth quarter after deals with Elon Musk’s xAI and other customers, Chief Operating Officer Jeff Clarke said Thursday in a statement. Earlier this month, Bloomberg reported that Dell was securing a massive $5 billion server order with Musk’s startup.

Still, Dell said its gross margin in the fiscal year will decline 1 percentage point from a year earlier. AI hardware has squeezed the company’s profitability, largely due to the need for expensive chips from Nvidia Corp.

On a call with analysts Thursday, Dell executives were asked multiple questions about how AI servers impact the company’s profit margins. While server deployments with Nvidia’s newest Blackwell chips are lower-margin, Dell will be able to sell higher-margin products such as storage along with the servers, Clarke said during the call.

For More: Nvidia’s AI Boom Brings Riches to Partners Like Dell, at a Cost

The shares initially jumped as much as 6.6% in extended trading when the results were released before giving up those gains and falling about 3%. The stock closed at $107.83 in New York and has declined 6.4% this year.

Total earnings, excluding some items, will be about $9.30 a share on sales of $101 billion to $105 billion in the fiscal year ending in January 2026, the Texas-based company said in the statement. Analysts, on average, projected profit of $9.24 a share on revenue of $103 billion.

“We’re well positioned to capture growth across every segment of our business,” Clarke said. “Our prospects for AI are strong, as we extend AI from the largest cloud service providers, into the enterprise at-scale, and out to the edge with the PC.”