DELL Technologies reported better-than-expected sales and profit as corporations appear to be updating their information technology equipment to meet artificial intelligence (AI) demand. The shares jumped about 17 per cent after the results were released.
Sales declined 11 per cent to US$22.3 billion in the fiscal fourth quarter, the company said on Thursday (Feb 29). That is slightly ahead of the US$22.2 billion expected by analysts. Profit, excluding some items, was US$2.20 per share. Analysts, on average, projected US$1.72, according to data compiled by Bloomberg.
Known for its personal computer (PC) business, Dell has attracted investor interest over the last year due to a spike in demand for high-powered servers needed to run AI workloads. The infrastructure unit, which includes servers, reported revenue of US$9.33 billion, topping estimates. A sequential increase in sales from the previous period was “driven primarily by AI-optimised servers”, the Round Rock, Texas-based company said, though the unit’s total revenue declined 6 per cent from the same quarter a year earlier.
The shares hit a high of US$113.34 in extended trading after closing at US$94.66 in New York. The stock has more than doubled over the last 12 months amid investor excitement about the role of servers in an AI-driven purchasing cycle.
“We’ve just started to touch the AI opportunities ahead of us, and we believe Dell is uniquely positioned with our broad portfolio to help customers build GenAI solutions that meet performance, cost and security requirements,” chief operating officer Jeff Clarke said, referring to generative AI. The backlog for AI servers was US$2.9 billion at the end of the period on Feb 2, he said.
Sales of computers declined 12 per cent to US$11.7 billion, steeper than the 10 per cent drop anticipated by analysts, reflecting an ongoing slump in the PC market. Commercial sales fell 11 per cent to US$9.56 billion while consumer revenue plunged 19 per cent to US$2.2 billion.
On Wednesday, PC competitor HP also missed analyst estimates for computer sales, saying that demand would take longer to recover. While the market has gone through a downturn “unparallelled in the industry’s recorded history”, the market is poised to turn around later in 2024, research firm IDC wrote last month in a report. BLOOMBERG
