Dell Technologies (DELL.N) anticipates annual revenue and profit surpassing Wall Street’s projections, propelled by the burgeoning demand for its artificial intelligence servers, triggering a surge of more than 16% in its shares during after-hours trading.
The surge in demand for Dell’s AI servers, outfitted with Nvidia’s (NVDA.O) GPUs, underscores the company’s fortuitous position in the high-performance computing landscape.
Chief Operating Officer Jeff Clarke highlighted this trend, stating, “Our strong AI-optimized server momentum continues, with orders increasing nearly 40% sequentially and backlog nearly doubling, exiting our fiscal year at $2.9 billion.”
Furthermore, the resurgence in the PC market after a revenue slowdown since 2022 signals a promising trajectory.
Dell’s CFO Yvonne McGill expressed optimism during a post-earnings call, asserting, “We remain bullish on the coming PC refresh cycle and the longer-term impact of AI on the PC market.”
Contrastingly, rival server manufacturer Hewlett Packard Enterprise (HPE.N) witnessed a 3.7% decline in its shares in after-hours trading as it forecasted quarterly revenue below analysts’ expectations.
In contrast, Lenovo Group (0992.HK) reported robust quarterly earnings last week, with revenue rebounding after five consecutive quarters of decline.
According to data research firm Canalys, the global PC market registered 3% growth in the fourth quarter of 2023, setting the stage for a more robust recovery in 2024.
Dell anticipates its revenue for the current fiscal year to range between $91 billion to $95 billion, surpassing analysts’ average estimate of $92.07 billion.
Similarly, the company expects annual adjusted earnings per share to be $7.50 plus or minus $0.25, compared to the estimated $7.15.
For the fourth quarter ended Feb. 2, Dell reported an 11% decline in revenue to $22.32 billion, slightly higher than the estimated $22.16 billion.
Excluding items, its profit per share stood at $2.20, compared to estimates of $1.73.
Revenue from the infrastructure solutions group, encompassing storage, software, and server offerings, fell approximately 6% to $9.33 billion.
Conversely, revenue from the client solutions group, which includes PCs, experienced a decline of nearly 12% to $11.72 billion.