Dell Technologies Inc. has reported the highest sales and earnings figures for its products over the past six months.
The results of the mentioned company, based in Austin, Texas, exceeded preliminary expectations. In this case, a significant factor affecting the financial performance of the brand was the high level of demand for information technology equipment for operating with artificial intelligence.
Dell is known as one of the largest manufacturers of personal computers in the global market. Over the past year, the scale of attention to the company from investors has increased. This tendency is driven by the fact that the firm produces powerful servers necessary to perform workloads using artificial intelligence.
The company’s infrastructure unit, which includes a server-related business, recorded revenue of $9.33 million for the fourth fiscal quarter. This result exceeded the figures contained in the forecasts. The growth in sales of the mentioned products was largely due to the advent of servers optimized for artificial intelligence. This was announced by the company last Thursday, February 29. At the same time, the revenue of the mentioned unit fell by 6% compared to a year ago.
The company’s share price increased by 21% in the premarket trading on Friday, March 1. If this dynamic persists, the largest increase in the mentioned indicator will be recorded since September. Over the past 12 months, the company’s share price has more than doubled amid investor excitement about the importance of servers in the purchasing cycle based on artificial intelligence.
Jeff Clarke, Dell’s chief operating officer, in the context of reflections on generative artificial intelligence, says that the firm is just beginning to touch the possibilities of AI. According to him, Dell has unique capabilities with a wide portfolio that allows customers to create solutions based on advanced technology that meets the requirements of performance, cost, and security. Jeff Clarke also reported that as of February 2, the backlog for artificial intelligence servers was equal to $2.9 billion.
Mr. Clarke stated that the total value of the mentioned servers supplied by the company during the last fiscal quarter was $800 million. He also noted that the development of this business was hampered by the shortage of availability of advanced computer chips. According to him, in this case, demand outstrips supply, although an improvement in the timing of Nvidia’s making microcircuits H100 has been recorded.
Analyst Woo Jin Ho says that Dell’s strong position in the storage segment has allowed the company to reduce the negative effect of a decrease in sales of personal computers. Separately, the expert noted that the steady consumer interest in servers with artificial intelligence has ensured consistent growth. The dynamic of sales of these servers remains high. In the last fiscal quarter, the volume of orders for concerned products from Dell increased by 40% year-on-year. The volume of backlog work in this segment of the company’s business amounted to $2.9 billion. A quarter earlier, this figure was fixed at $1.6 billion.
Dell forecasts revenue in the range of $91 billion to $95 billion in the fiscal year ending February 2025. Profits are expected to be $7.5 per share. This was announced by the Chief Financial Officer of the company, Yvonne McGill.
Hewlett Packard Enterprise, which competes with Dell in the server business, has lowered its sales forecast for the current year. The adjustment of the vision of future results is explained by the fact that the company is faced with the problem of an insufficient number of GPUs to supply high-powered servers. Against the background of the deteriorating outlook, the share price of HP’s competitor fell by about 4% during extended trading.
Last quarter, Dell’s revenue reached $22.3 billion. This indicator decreased by 11% year-on-year. Analysts had expected revenue of $22.2 billion.
The personal computer manufacturing business generated $11.7 billion in revenue for Dell last quarter. This indicator showed a decrease of 12% year-on-year.
Jeff Clarke believes that the personal computer market will continue to be weak in the near term. In his opinion, the recovery in this area will begin in the second half of the current year. Jeff Clarke says that businesses and large customers continue to adhere to a spending approach based on the principle of prudence. According to him, the purchase cycle of new personal computers should begin insofar as the current inventions are outdated, and devices linked to Microsoft Windows 11 software and hardware focused on artificial intelligence are released.
Dell’s revenue for the entire last fiscal year was $88.4 billion. This indicator decreased by 14% year-on-year.
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