(Bloomberg) — Dell Technologies Inc . It fell nearly 18% in extended trading while its first revenue increase since 2022 wasn't enough to impress investors with high expectations for the company's AI server business.
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The Texas-based company, Round Rock, said in a statement Thursday that sales rose 6.3 percent to $22.2 billion in the period ended May 3. Analysts on average estimated $21.6 billion. Profit, excluding certain items, was $1.27 per share, compared with the average projection of $1.23.
Revenue from Dell's powerful servers to handle artificial intelligence tasks more than doubled to $1.7 billion from the previous quarter, Chief Operating Officer Jeff Clarke said in the statement. The backlog for these machines grew more than 30 percent quarter-over-quarter to $3.8 billion, he added.
Dell expects the AI demand momentum to continue throughout the year, Chief Financial Officer Yvonne McGill said on a conference call after the results were released.
The company raised its revenue outlook for the fiscal year ending in February 2025 to $93.5 billion to $97.5 billion, an 8% increase over the midpoint, topping analysts' average estimate of a 7% increase. will keep Adjusted earnings will be around $7.65 per share, compared to the average estimate of $7.70.
But the excitement surrounding AI demand for Dell's machines raised expectations for Thursday's results, Bloomberg Intelligence analyst Woo Jin-ho said in an interview on Bloomberg Television after the report was released.
Shares hit a low of $138.15 in extended trading after closing at $169.92 in New York. Dell's stock has more than tripled in the past 12 months as investors see the hardware maker as a beneficiary of demand for artificial intelligence. Large corporations increasingly need high-powered servers to train and run generative AI tasks, which Dell and a few other companies sell.
“The results weren't bad, but expectations were high, and the numbers weren't strong enough to warrant further growth in the near term,” analysts at VitalKnowledge wrote.
For its flagship business selling personal computers, Dell reported revenue of $12 billion, little changed from the same period a year ago. Business PC sales rose 3 percent to $10.2 billion, surprising analysts who expected a 2 percent decline.
The PC market has seen a historic decline over the past two years after many consumers, businesses and schools bought laptops in the early months of the pandemic. In the first quarter, shipments rose 1.5 percent — the first increase since the end of 2021, industry analyst IDC said in April.
PC makers hope these numbers signal the end of the decline and that growth will see machines equipped with new versions of Microsoft Corp.'s Windows software as well as hardware equipped with chips to handle artificial intelligence in 2024. Will be faster with the start. Tools.
Dell's primary PC competitor, HP Inc., showed signs of a recovery in the computer market on Wednesday, sending its shares up 17 percent on Thursday. Like Dell, HP reported sales growth among its business customers rather than consumers.
Total sales of Dell's infrastructure unit, which includes servers and networking and storage equipment, rose 22 percent to $9.2 billion.
(Updates with Outlook in the fifth paragraph.)
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