Key Points
- Dell reported fiscal third-quarter earningson Tuesday that missed Wall Street expectations for revenue.
- But the company said it would have a bigfourth quarter driven by $9.4 billion in AI sales.
- Dell is an important bellwether for thehealth of the AI infrastructure industry as one of the top vendors for systems
based around Nvidia graphics processors.
Dell reported fiscal third-quarter earnings onTuesday that missed Wall Street expectations for revenue, but the company
forecasted a stronger-than-expected fourth quarter driven by increased AI sales.
Dell shares rose 5% in extended trading.
Here’s how Dell didversus LSEG consensus estimates:
EPS: $2.59 adjusted versus $2.47 estimated
Revenue: $27.01 billion versus $27.13billion estimated
Dell said it expects about $31.5 billion insales in the fourth quarter versus $27.59 billion estimated by analysts. The
company said it expects fourth-quarter earnings per share of $3.50 versus $3.21
expected.
The company said it was raising itsexpectations for AI server shipments during the year to $25 billion, up from
$20 billion, and raised its full-year revenue guidance to $111.7 billion from
$107 billion.
Dell reported $1.54 billion in net income,or $2.28 per diluted share, during the quarter, versus $1.17 billion, or $1.64 in the year-ago period.
The company is an important bellwether forthe health of the AI infrastructure industry as one of the top vendors for
systems based around Nvidia’s graphics processors. Overall revenue in thequarter rose 11% on an annual basis.
Dell’s maincustomers for its artificial intelligence systems are big businesses,
governments and so-called neoclouds like CoreWeave.
.Dells sells less to big cloud companiestypically called hyperscalers, which have been the most voracious Nvidia buyers
so far.
The company said it expects to sell $9.4billion of AI servers in the fourth quarter, and that doesn’t include a deal announced in November to sell Nvidia-based GB300systems to Iren, a neocloud that plans to rent them out to Microsoft.
Dell’s data centerbusiness, called Infrastructure Solutions Group, reported $14.11 billion in
sales, in-line with analyst estimates. Of that, $10.1 billion was for servers
and networking parts, which was up 37% on an annual basis. Much of that
increase was driven by $5.6 billion in AI server shipments. Dell said it sold
$4 billion of storage gear during the quarter.
But the company said that its laptop and PCbusiness, called Client Solutions Group, reported $12.48 billion in sales,
which was up 3% year-over-year but slightly lower than the $12.65 billion
expected by analysts.
Dell’s laptop andPC business was hit particularly hard, declining 7% on an annual basis.
The company said it spent $1.6 billionduring the quarter on share repurchases and dividends.