The influence of AI on computing is progressively overshadowing traditional PC technology, as indicated by Dell Technologies Inc.
Following the announcement of quarterly results that surpassed Wall Street’s expectations, Dell’s stock symbol DELL, +1.51% surged by 15% during after-hours trading on Thursday. Moreover, the company revealed a 20% uptick in its annual cash dividend, elevating it to $1.78 per share.
In the fiscal fourth quarter, the renowned personal-computer entity reported a net income of \(1.16 billion, translating to \)1.59 per share, a substantial increase from the previous year’s figures of \(606 million and 84 cents per share respectively. This growth was primarily fueled by the escalating demand for AI servers, with adjusted earnings for the period reaching \)2.20 per share.
Despite a decline in net income from \(25 billion to \)22.3 billion compared to the preceding quarter, Dell’s Chief Operating Officer Jeff Clarke highlighted the $800 million worth of AI-server shipments during a conference call with analysts. Clarke also cautioned about a sluggish PC market that might persist until the latter half of 2024.
Clarke emphasized the overwhelming demand for AI servers and related services, stating that the supply is currently insufficient to meet the market needs.
Projections from Dell executives suggest a prospective growth of 3% to 5% in fiscal 2025, driven by the anticipated surge in demand for AI servers and a resurgence in PC sales by late 2024. They are eyeing annual sales figures ranging from \(91 billion to \)95 billion for the fiscal year 2025, slightly higher than the $92.2 billion forecasted by FactSet researchers.
Recently, Dell unveiled a lineup of new laptops and PCs equipped with neural-processing units designed to handle AI workloads efficiently.
For the third quarter, analysts surveyed by FactSet had predicted an average net income of \(1.73 per share on revenue amounting to \)22.17 billion for Dell.
Over the past year, Dell’s stock has witnessed a remarkable 136% surge, outperforming the broader S&P 500 index SPX, which recorded a 28% increase.
Business executives have highlighted Dell’s exceptional quarter and forward guidance, attributing the surge in AI sales from corporate clients to the company’s success.
Dell’s AI momentum was underscored by a 40% surge in its order backlog. With Nvidia’s NVDA, +1.87% H100 and AMD’s AMD, +9.06% MI300 experiencing robust early demand, industry experts, such as Daniel Newman, principal analyst at Futurum Group, believe Dell is well-positioned to capitalize on the burgeoning AI market.
Rajiv Ramaswami, the CEO of Nutanix Inc. NTNX, +6.98%, emphasized the escalating demand for generative AI applications in various sectors like customer support, documentation, system assistance, and fraud detection, following the strong financial results posted by his company.
In an interview, Ramaswami expressed optimism about the future potential of AI, stating, “We are in the early stages of the journey.” He added, “Companies are experimenting and making the best use of AI,” emphasizing the increasing willingness of companies to invest in AI technologies.
