Dell Technologies on Thursday forecast full-year revenue and profit above Wall Street estimates and bet on demand for its artificial intelligence servers, sending the company’s shares up more than 16% in after-hours trading.
Dell is benefiting from growing demand for its AI-powered servers, which feature Nvidia graphics processing units (GPUs) to help meet high-performance computing demands.
“Our strong AI-optimized server momentum continues, with orders up nearly 40% sequentially and backlog nearly doubling, ending our fiscal year at $2.9 billion,” COO Jeff Clarke said in a statement.
The PC market is also showing signs of recovery after a slowdown in sales that began in 2022 from pandemic-hit peaks as the boom in demand for PCs and work-from-home electronics faded.
“We remain optimistic about the upcoming PC recovery cycle and the longer-term impact of artificial intelligence on the PC market,” CFO Yvonne McGill said after the earnings call.
Also in after-hours trading on Thursday, shares of rival server maker Hewlett Packard Enterprise fell 3.7% after it forecast quarterly revenue below Wall Street estimates.
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Another competitor, Lenovo Group, reported strong quarterly earnings last week, with sales returning to growth after five quarters of decline.
The global PC market returned to 3% growth in the fourth quarter of 2023 and is now poised for a stronger recovery in 2024, data research firm Canalys said in January.
Dell expects revenue of between $91 billion and $95 billion for the current fiscal year, the midpoint of which is higher than the average analyst estimate of $92.07 billion, according to LSEG data.
It expects full-year adjusted earnings per share of $7.50 plus or minus $0.25, compared with estimates of $7.15.
The company reported an 11% drop in revenue to $22.32 billion for the fourth quarter ended Feb. 2, slightly more than estimates of $22.16 billion. Excluding items, its earnings per share were $2.20, compared with estimates of $1.73.
Revenue from the infrastructure solutions group, which includes its storage, software and server offerings, fell 6% to $9.33 billion, while revenue from the client solutions group — PC homes — fell nearly 12% to $11.72 billion.
