Michael Dell attends the Allen & Company Sun Valley Conference on July 12, 2024 in Sun Valley, Idaho.
David Grogan | CNBC
Dell Quarterly results announced Thursday exceeded Wall Street expectations, with server sales rising 80%. The stock rose more than 3% in after-hours trading.
Here’s how the company’s fiscal second-quarter performance compared to the London Stock Exchange Group consensus estimate:
- income: US$25.06 billion, expected US$24.53 billion
- Earnings per share: Adjusted $1.89, expected $1.71
Net profit rose 85% to $841 million ($1.17 per share) from $455 million (or 63 cents per share) in the same period last year. Revenue grew about 9% from $22.93 billion a year ago.
The stock fell after Dell revised its full-year guidance to a range of $95.5 billion to $98.5 billion, a slight increase from the company’s previous forecast. Earlier this year, the company told investors it expected full-year revenue to be between $93.5 billion and $97.5 billion, up from $88.4 billion the year before.
Dell said revenue for the current quarter is expected to be between $24 billion and $25 billion, in line with StreetAccount’s forecast of $24.6 billion.
Dell has become a top supplier of servers capable of handling artificial intelligence workloads, especially those based on NVIDIA As demand surges from cloud providers. Earlier this year, NVIDIA Chief Executive Jensen Huang said Dell founder Michael Dell was the point of contact for ordering systems containing the company’s new chips.
Dell shares have gained 48% so far this year, but have fallen 34% since the company’s last report.
Artificial intelligence sales are handled by the company’s Infrastructure Solutions group, which makes servers and systems for data centers. This is the company’s fastest growing division. ISG’s overall sales grew 38% to US$11.65 billion, higher than StreetAccount’s forecast of US$10.44 billion.
The most notable part of Dell’s report was server and networking revenue, which includes AI-oriented servers based on Nvidia and AMD GPUs, as well as more traditional servers for legacy applications. It is part of ISG.
“We are competing in all the big AI deals and winning significant deployments at scale,” Chief Operating Officer Jeff Clark said on an earnings call with analysts.
The segment’s sales were $7.76 billion, up 80% year over year, beating StreetAccount’s forecast of $6.37 billion. Dell said $3.1 billion of that came from sales of artificial intelligence servers, up from $1.7 billion in the May quarter.
Clarke attributed the revenue growth to the continued rise in server demand and said that the “backlog” of unfulfilled AI server orders has continued to increase, reaching $3.8 billion. There are also billions of dollars worth of AI server deals from enterprises and cloud providers that have yet to be finalized.
However, sales at Dell’s storage business, also part of ISG, fell 5% to $4 billion.
Revenue from Dell’s Customer Solutions Group, which focuses on PCs and notebooks, fell 4% year-on-year to $12.41 billion. Consumer sales fell 22% to $1.86 billion, while sales at the company’s enterprise PC business were flat at $10.55 billion.
Dell said it spent $1 billion on stock buybacks and dividends during the quarter.
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