Dell raises full-year forecasts on growing demand for AI-optimised servers
- The company is expected to see a demand boost from Big Tech companies for its PowerEdge servers and generative AI designs with Nvidia
- The results show that a downturn in tech spending could be drawing to a close after Cisco also beat quarterly revenue estimates
Dell Technologies raised its full-year forecast for revenue and profit on Thursday, as it benefited from the artificial intelligence (AI) boom and stabilising demand for computer hardware and server products after a months-long slump.
Shares of the Round Rock, Texas-based company rose 8 per cent in extended trading.
The results are the latest sign that a downturn in tech spending could be drawing to a close after major networking equipment provider Cisco also beat quarterly revenue estimates.
The company is expected to see a demand boost for its PowerEdge servers and generative AI designs with Nvidia from rising investments in artificial intelligence by Big Tech companies.
“AI is already showing it’s a long-term tailwind, with continued demand growth across our portfolio,” chief operating officer Jeff Clarke said.
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The company forecast third-quarter revenue between US$22.5 billion and US$23.5 billion beating analysts’ estimates of US$21.67 billion, according to Refinitiv data. Dell expects earnings per share of US$1.45, plus or minus 10 US cents compared with estimates of US$1.38.
For the full year, Dell now expects revenue between US$89.5 billion and US$91.5 billion, and earnings per share of US$6.30, plus or minus 20 US cents.
Dell reported second quarter revenue and EPS above analyst estimates.
Servers and networking revenue for the second quarter came in at US$4.27 billion, up 11 per cent from the first quarter, driven by higher demand for AI-optimised servers, Dell said.
Revenue at the company’s client solutions group (CSG) – home to its consumer and enterprise PC business – rose 8 per cent from the first quarter to US$12.94 billion.
Gartner analyst Mikako Kitagawa said Dell keeping 7.5 per cent of operating profits vs revenue (CSG) is impressive in this challenging market environment illustrating the company’s “profitability first approach”.
The results are in sharp contrast with rival HP which cut its annual forecast due to a slump in PC demand and weakness in China.
