Dell Technologies raised its full-year forecast for revenue and profit on Thursday, as it benefited from the artificial intelligence (AI) boom and stabilizing demand for computer hardware and server products after a months-long slump. Shares of the Round Rock, Texas-based company rose 8 percent 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.
The company forecasted third-quarter revenue between $22.5 billion (roughly Rs. 1,86,025 crore) and $23.5 billion (roughly Rs. 1,94,251 crore) beating analysts’ estimates of $21.67 billion (roughly Rs. 1,79,129 crore), according to Refinitiv data. Dell expects earnings per share of $1.45 (roughly Rs. 120), plus or minus 10 cents compared with estimates of $1.38 (roughly Rs. 114).
For the full year, Dell now expects revenue between $89.5 billion (roughly Rs. 7,40,057 crore) and $91.5 billion (roughly Rs. 7,56,595 crore), and earnings per share of $6.30 (roughly Rs. 521), plus or minus 20 cents.
Dell reported second-quarter revenue and EPS above analyst estimates.
Servers and networking revenue for the second quarter came in at $4.27 billion (roughly Rs. 3,52,953 crore), up 11 percent from the first quarter, driven by higher demand for AI-optimized servers, Dell said.
Revenue at the company’s client solutions group (CSG) – home to its consumer and enterprise PC business – rose 8 percent from the first quarter to $12.94 billion (roughly Rs. 1,06,974 crore).
Gartner analyst Mikako Kitagawa said Dell keeping 7.5 percent 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.
© Thomson Reuters 2023
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