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Dell Technologies projects annual revenue and profit surpassing Wall Street expectations, driven by the increasing demand for its artificial intelligence servers. The company's shares surged over 16% in after-hours trading.
Dell's AI Server Growth
Benefiting from the rising need for AI servers equipped with Nvidia GPUs, Dell continues to see strong momentum in its AI-optimized servers. According to Channel News Asia, Orders surged by almost 40% sequentially, with the backlog nearly doubling, reaching $2.9 billion by the end of the fiscal year.
The PC market is displaying signs of recovery after a revenue slowdown that commenced in 2022. The surge in work-from-home demands for PCs and electronics is subsiding, but Dell remains optimistic about the upcoming PC refresh cycle and the long-term impact of AI on the market.
On the other hand, Hewlett Packard Enterprise witnessed a 3.7% drop in shares after projecting quarterly revenue below Wall Street estimates. In contrast, Lenovo Group reported robust quarterly earnings, marking a revenue rebound after five quarters of decline.
Reuters reported that the global PC market saw a 3% growth in the fourth quarter of 2023, hinting at a more robust recovery expected in 2024, according to Canalys. Dell anticipates revenue between $91 billion and $95 billion for the fiscal year, surpassing analysts' average estimate of $92.07 billion.
Financial Outlook
The company expects annual adjusted earnings per share of $7.50 plus or minus $0.25, compared to an estimate of $7.15. Dell's fourth-quarter revenue dropped by 11% to $22.32 billion but exceeded estimates. The infrastructure solutions group revenue fell by about 6%, while the client solutions group revenue dropped nearly 12%.
Despite the fluctuations in the technology sector, Dell's strategic focus on AI and PC market innovation sets a positive trajectory for its future growth. The company's ability to adapt to market demands and its significant investments in research and development play a crucial role in maintaining its competitive edge.
Photo: Dell/Unsplash
