(Reuters) -Dell Technologies forecast annual revenue and profit above Wall Street estimates on Thursday, betting on demand for its artificial intelligence servers, sending the company’s shares up more than 16% in after-hours trading.
Dell (NYSE:DELL) is a beneficiary of rising demand for its AI servers that are equipped with chip designer Nvidia (NASDAQ:NVDA)’s graphics processing units (GPUs), which helps to meet the demands of high-performance computing.
“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,” Chief Operating Officer Jeff Clarke said in a statement.
The PC market is also showing signs of recovery following a slowdown in revenue that began in 2022 from the peaks touched during the pandemic, as the boom in work-from-home demand for PCs and electronics faded.
“We remain bullish on the coming PC refresh cycle and the longer-term impact of AI on the PC market,” CFO Yvonne McGill said on a post-earnings call.
Also in after-hours trading on Thursday, shares in rival server maker Hewlett Packard Enterprise (NYSE:HPE) dropped 3.7% after it forecast quarterly revenue below Wall Street estimates.
Another competitor, Lenovo Group (OTC:LNVGY) last week reported strong quarterly earnings, with revenue 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 between $91 billion to $95 billion for its current fiscal year, the mid-point of which is above analysts’ average estimate of $92.07 billion, according to LSEG data.
It expects annual adjusted earnings per share of $7.50 plus or minus $0.25, compared with estimate of $7.15.
The company posted an 11% drop in revenue to $22.32 billion for its fourth quarter ended Feb. 2, slightly higher than estimates of $22.16 billion. Excluding items, its profit per share came in at $2.20, compared with estimates of $1.73.
Revenue at the infrastructure solutions group, which includes its storage, software and server offerings, fell about 6% to $9.33 billion, while that of the client solutions group – home to PCs – fell nearly 12% to $11.72 billion.
Source: Economy - investing.com
