Updated March 1st, 2024 at 16:40 IST

Dell exceeds profit estimates amid growing AI server demand, shares zoom

With orders surging nearly 40% sequentially and backlog nearly doubling to $2.9 billion by the end of the fiscal year, Dell is optimistic about the coming year.

Reported by: Business Desk
Dell | Image:Unsplash

Dell for AI: Dell Technologies exceeded Wall Street expectations with its forecasted annual revenue and profit, driving its shares up over 16 per cent in after-hours trading. The company is capitalising on the growing demand for its artificial intelligence (AI) servers, equipped with Nvidia's graphics processing units (GPUs), which cater to the requirements of high-performance computing.

Chief Operating Officer Jeff Clarke highlighted the strong momentum in AI-optimised server sales, with orders surging nearly 40 per cent sequentially and backlog nearly doubling to $2.9 billion by the end of the fiscal year.


Despite a previous revenue slowdown in the PC market, attributable to the waning demand for PCs and electronics amid the pandemic-driven work-from-home trend, Dell is optimistic about a recovery. CFO Yvonne McGill expressed confidence in the upcoming PC refresh cycle and the long-term impact of AI on the PC market.

Conversely, rival server maker Hewlett Packard Enterprise experienced a 3.7 per cent decline in shares after forecasting quarterly revenue below expectations. However, Lenovo Group reported robust quarterly earnings, marking a return to revenue growth after five quarters of decline.


According to data research firm Canalys, the global PC market experienced 3 per cent growth in the fourth quarter of 2023, signalling a potential for a stronger recovery in 2024.

For the current fiscal year, Dell anticipates revenue between $91 billion to $95 billion, surpassing analysts' average estimate of $92.07 billion. Additionally, the company expects annual adjusted earnings per share of $7.50 plus or minus $0.25, compared to the estimated $7.15.


In its fourth-quarter results, Dell recorded an 11 per cent decline in revenue to $22.32 billion, slightly higher than estimates. Excluding items, the company's profit per share stood at $2.20, exceeding estimates of $1.73. While revenue in the infrastructure solutions group, encompassing storage, software, and server offerings, fell approximately 6 per cent to $9.33 billion, revenue in the client solutions group, housing PCs, declined nearly 12 per cent to $11.72 billion.

(With Reuters inputs)


Published March 1st, 2024 at 13:51 IST