Written by Jaspreet Singh
(Reuters) – Dell Technologies Inc.'s shares rose more than 16% in after-hours trading on Thursday as the company bet on demand for artificial intelligence servers to expect full-year sales and profits to beat Wall Street expectations.
Dell is benefiting from growing demand for AI servers powered by chip designer Nvidia's graphics processing units (GPUs) to help meet the demands of high-performance computing.
“Momentum continues for our AI-optimized servers, with orders up nearly 40% quarter-over-quarter and backlog nearly doubling for the fiscal year,” Chief Operating Officer Jeff Clark said in a statement. It ended with $2.9 billion.”
The PC market is also showing signs of recovery after a slowdown in revenues that began in 2022 as the boom in work-from-home demand for PCs and electronics faded, peaking during the pandemic.
“We remain bullish on the upcoming PC refresh cycle and the long-term impact of AI on the PC market,” Chief Financial Officer Yvonne McGill said in a post-earnings conference call.
Also in after-hours trading Thursday, shares of rival server maker Hewlett Packard Enterprise fell 3.7% after the company said its quarterly revenue would fall below Wall Street expectations.
Another competitor, Lenovo Group, reported strong quarterly profits last week, with sales increasing after five quarters of decline.
Data research firm Canalys said in January that the global PC market will return to 3% growth in the fourth quarter of 2023, with an even stronger recovery in 2024.
Dell expects revenue for the current fiscal year between $91 billion and $95 billion, according to LSEG data, with the midpoint above analysts' average estimate of $92.07 billion.
Full-year adjusted earnings per share are expected to be $7.50, plus or minus $0.25, compared to expectations of $7.15.
The company's revenue for the fourth quarter ended Feb. 2 fell 11% to $22.32 billion, slightly above expectations of $22.16 billion. Excluding items, earnings per share were $2.20, compared to expectations of $1.73.
Sales in the Infrastructure Solutions Group, which includes storage, software and server products, were down about 6% to $9.33 billion, while sales in the Client Solutions Group, which focuses on PCs, were down nearly 12% to $11.72 billion. It amounted to 1 million dollars.
(Reporting by Jaspreet Singh in Bengaluru; Additional reporting by Noel Randewicz in Oakland, California; Editing by Shailesh Coover and Jamie Freed)