Dell reported its quarterly results, exceeding Wall Street’s expectations with a significant increase in server sales. The company’s revenue for the fiscal second quarter stood at $25.03 billion, surpassing the estimated $24.53 billion. The earnings per share (EPS) also outperformed predictions at $1.89 adjusted, compared to the anticipated $1.71. This positive outcome led to a surge in Dell’s stock price by over 3% during extended trading.
Net income observed a substantial 85% climb to $841 million, translating to $1.17 per share, from $455 million, or 63 cents per share, in the corresponding period last year. Dell’s revenue experienced a commendable 9% growth, reaching $25.03 billion from $22.93 billion in the previous year.
However, despite the strong performance, Dell revised its full-year revenue forecast to a range between $95.5 billion and $98.5 billion. While this represents a slight upward adjustment from the previous estimate, it prompted a temporary decline in the stock value. Earlier projections had placed Dell’s full-year revenue between $93.5 billion and $97.5 billion. The company anticipates generating revenue ranging from $24 billion to $25 billion in the current quarter, aligned with the StreetAccount estimate of $24.6 billion.
Dell has emerged as a top vendor for servers capable of handling artificial intelligence (AI) workloads, particularly those powered by Nvidia chips. The rising demand from cloud providers has positioned Dell as a key player in this market segment. Nvidia’s CEO, Jensen Huang, singled out Dell’s founder, Michael Dell, as the go-to person for ordering systems incorporating the company’s latest chips. Dell’s focus on AI sales within its Infrastructure Solutions Group, responsible for servers and data center systems, has proved successful, with overall ISG sales rising by 38% to $11.65 billion, exceeding StreetAccount estimates of $10.44 billion.
Dell’s Servers and Networking segment, encompassing AI-oriented servers leveraging GPUs from both Nvidia and AMD, along with traditional servers for legacy applications, showcased remarkable growth. The unit reported $7.76 billion in sales, marking an 80% increase year-over-year and surpassing expectations. AI server sales specifically contributed $3.1 billion to this figure, up from $1.7 billion in the previous quarter. Jeff Clarke, Dell’s operating chief, emphasized the company’s success in securing major AI deals and scaling deployments in this domain.
Conversely, Dell faced challenges in its storage business within the Infrastructure Solutions Group, witnessing a 5% decline to $4 billion in sales. The Client Solutions Group, focusing on PCs and laptops, recorded a 4% drop in revenue on an annual basis, with consumer sales plummeting by 22% to $1.86 billion. The enterprise PC business remained stagnant at $10.55 billion in sales.
Despite the fluctuations in different business segments, Dell allocated $1 billion towards share repurchases and dividends during the quarter, reflecting its commitment to returning value to shareholders. It is evident that Dell’s performance in the AI server market and data center solutions has been a significant driver of growth, overshadowing challenges in other areas of the business.
Dell’s quarterly results showcase the company’s ability to capitalize on the burgeoning demand for AI-driven technologies while navigating through competitive landscapes in the PC and storage markets. By focusing on innovation and strategic partnerships, Dell remains well-positioned to sustain its growth trajectory in the evolving tech industry.