(Reuters) -Dell Technologies raised annual revenue and profit forecasts on Thursday, buoyed by demand for its artificial intelligence-optimized servers that are powered by Nvidia's advanced chips.

Rising demand for AI servers, capable of handling computational needs of AI workloads, including training large language models, is benefiting companies such as Dell and Super Micro Computer.

Dell now expects $20 billion in fiscal 2026 revenue from AI server shipments, up from its prior forecast of $15 billion.

Its AI servers are used by customers, including Elon Musk's AI startup xAI and CoreWeave.

The company raised its annual revenue forecast to be between $105 billion and $109 billion from its earlier expectations of $101 billion and $105 billion.

Dell expects adjusted earnings per share of $9.55, up from its prior projection of $9.40.

Third-quarter revenue forecast of $26.5 billion to $27.5 billion was above analysts' average estimate of $26.05 billion, according to data compiled by LSEG.

Adjusted profit forecast for the quarter of $2.45 per share was below estimates of $2.55 per share.

Revenue for the second quarter came in at $29.78 billion, beating estimates of $29.17 billion. Excluding items, it reported adjusted profit of $2.32 per share, slightly beating estimates of $2.30 per share.

Dell's revenue for the infrastructure solutions group, which includes its storage, software and server offerings, rose 44% to $16.80 billion, while the client solutions group - home to PCs - grew 1% to $12.50 billion.

A strong PC refresh cycle is expected after Microsoft ends support for Windows 10 in October, as users seek to maintain security and access to the latest features, boosting demand for PC makers such as Dell and HP.

HP beat analysts' estimates for third-quarter revenue on Wednesday, helped by the adoption of AI PCs and the Windows 11 upgrade cycle.