Dell’s enthusiasm for AI possibilities is growing to record.

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(Bloomberg) — Dell Technologies Inc. hit a record high after reporting better-than-expected sales and profit, driven by demand for information technology equipment to handle artificial intelligence work.

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Best known for its PC business, Dell has attracted investor attention over the past year as interest in its high-powered servers for running AI workloads has grown. The company’s infrastructure unit, which includes servers, reported revenue of $9.33 billion in the fiscal fourth quarter, topping estimates. Dell said on Thursday that a sequential increase in sales from the prior period was “primarily driven by AI-optimized servers,” although the unit’s total revenue fell 6% from the same quarter a year ago. .

Shares jumped 32% to $124.59 at the close on Friday in New York, Dell’s best one-day gain and highest price since its return to public markets in December 2018. The stock has tripled in the past 12 months amid investor excitement about the role. of servers in an AI-powered procurement cycle.

Chief Operating Officer Jeff Clark said in a statement, “We’re just beginning to touch the AI ​​opportunities in front of us, and we believe Dell is uniquely positioned with our broad portfolio to help customers build GenAI solutions.” support that meets performance, cost and security requirements.” statement, referring to creative AI. AI Servers had a backlog of $2.9 billion at the end of the period on February 2, he said.

Dell shipped $800 million in AI-optimized servers in the quarter, Clark said in prepared remarks for a conference call on the results. Like many in the industry, however, the business is being held back by the availability of advanced computer chips, Clark added. Demand is outpacing supply, “although we are seeing improvements in H100 lead times,” market leader Nvidia Corp. Referring to the key chip.

Read more: Dell’s PC battles risk of masking AI benefits

What Bloomberg Intelligence Says

Strength in Dell’s storage segment helped offset a slight drag on its PC results, which led to a modest increase in sales. Although the company noted healthy AI-server demand, which led to sequential growth, it may have offset sustained softness in general server demand. AI-Server momentum is strong, with orders up 40% and backlog at $2.9 billion vs. $1.6 billion in 3Q.

– Woo Jin Ho, Senior Industry Analyst

Dell forecast revenue of $91 billion to $95 billion in the fiscal year ending February 2025, compared with an average estimate of $92.1 billion. Chief Financial Officer Yvonne McGill said on a conference call after the results that profit, excluding certain items, would be $7.50 a share, plus or minus 25 cents. Analysts on average estimated $7.11.

McGill said the computer unit’s revenue should grow in the “low single digits” while the infrastructure unit will grow “in the mid-teens driven by AI.”

Hewlett-Packard Enterprise, which competes with Dell in the server business, cut its sales outlook for the current year, as the company said it could not find enough GPUs to supply high-powered servers. Shares fell about 4 percent in extended trading.

Dell also increased its annual dividend by 20% to $1.78 per share. A quarterly dividend of 44.5 cents per share will be payable to investors on May 3 through April 23. Other tech companies, including Salesforce Inc. and MetaPlatforms Inc., recently announced new profits.

In the quarter, revenue fell 11 percent to $22.3 billion, Texas-based Round Rock said in a statement. That’s slightly ahead of the $22.2 billion expected by analysts. Profit, excluding certain items, was $2.20 per share. Analysts on average estimated $1.72, according to data compiled by Bloomberg.

Sales of personal computers fell 12% to $11.7 billion, more than analysts expected for a 10% decline, reflecting a continued slowdown in the PC market. Commercial sales fell 11 percent to $9.56 billion, while consumer revenue fell 19 percent to $2.15 billion.

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“In the near term, the PC market remains soft and we expect the recovery to continue in the second half as enterprise and large users remain cautious with their spending,” Clark said. He added that there should be a flurry of new PC purchases as existing stock edges and computers are released with Microsoft Corp.’s Windows 11 software and AI-based hardware.

On Wednesday, PC competitor HP Inc. also recalled analysts’ estimates for computer sales, saying demand would take longer to recover. While the market has experienced a downturn “unprecedented in the recorded history of the industry,” the market is poised to change after 2024, research firm IDC wrote in a report last month.

In January, Dell announced that it had ended its reseller agreement with VMware, now owned by Broadcom Inc. Dell no longer resells most VMware products, except for embedded tools like VxRail and Carbon Black, a spokeswoman said.

(Updates with closing shares in third paragraph.)

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