Dell Technologies The company on Tuesday forecast fourth-quarter revenue and profit below Wall Street expectations, despite upbeat comments about artificial intelligence sales growth. According to PC manufacturers Tuesday quarterly earnings That beat analysts’ earnings-per-share estimates but had a modest impact on overall revenue.
Shares fell 10% in after-hours trading.
Here’s how Dell’s fiscal third-quarter results compare to LSEG’s consensus forecast for the quarter ending November 1:
- Earnings per share: Adjusted $2.15, expected $2.06
- income: US$24.4 billion, expected to be US$24.67 billion
Net profit climbed 12% from about $1 billion, or $1.36 per share, to $1.12 billion, or $1.58 per share. same period last year. Overall revenue grew about 10% from $22.25 billion a year ago.
Dell said it expected fourth-quarter revenue to be between $24 billion and $25 billion, compared with LSEG’s forecast of $25.57 billion. The company said it expected adjusted earnings of $2.50 per share, compared with expectations of $2.65 per share.
Chief Operating Officer Jeff Clark told investors on an earnings call that growth in artificial intelligence will vary from quarter to quarter.
“This business is not going to be linear, especially as customers navigate the underlying silicon roadmap that is changing,” Clark said.
The company’s shares are up 86% so far in 2024 as investors realize that it is one of the most important companies selling tools and systems for artificial intelligence developers.
Dell is a top supplier of computer clusters needed to develop and deploy artificial intelligence, especially based on NVIDIA Chip. It competes with other server manufacturers such as Super Micro and HPand manufacturers in Asia.
Demand for Nvidia’s AI accelerators remains high among cloud providers, enterprises and government agencies, who often purchase systems with tens of thousands of AI chips installed. Dell sells complete systems.
This year, Nvidia CEO Jensen Huang praised Dell and its founder Michael Dell as the company to contact to order its new Blackwell AI chips.
Dell executives said that some customer demand is being shifted to later quarters, waiting for Nvidia’s next-generation Blackwell chips, which are now in production but have not yet been shipped to end users in large quantities.
“We saw a rapid shift in orders to our Blackwell designs in the third quarter,” Clark said.
Dell said much of the growth in its artificial intelligence systems is already reflected in future orders worth $4.5 billion.
“We’re still in the early stages of companies learning how to deploy artificial intelligence,” Clark said.
Dell’s AI server sales are reported within the company’s Infrastructure Solutions group, which includes AI servers, storage, networking components and traditional servers. The group’s revenue grew 34% to $11.4 billion, driven primarily by sales of artificial intelligence.
The strongest part of Dell’s ISG business is its server and networking subsidiary, which includes artificial intelligence systems. Revenue grew 58% to $7.4 billion. Dell’s AI server shipments this quarter were US$2.9 billion. The company said that customers have booked US$3.6 billion in future AI server orders this quarter.
The company said rising orders for artificial intelligence servers have driven “double-digit” growth in demand for its traditional servers, which consume less power and are based on CPU chips from Intel or AMD, freeing up revenue for companies that have invested heavily. Space or power within the data center.
The company’s computer storage systems grew less strongly than servers, growing 4% to $4 billion. The ISG unit as a whole is more profitable due to selling higher-priced AI systems.
Sales at Dell’s Client Solutions Group, which sells PCs and notebooks to consumers and businesses, fell 1% year over year to $12.1 billion.
While the amount of PCs purchased by business customers for their employees increased 3% year over year to $10.1 billion, the company’s PC sales to consumers fell 18% year over year to $2 billion.
watch: Where to Find Value in Artificial Intelligence Stocks
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