Dell Technologies Boosts Revenue and Profit Forecast as AI Demand Surges
Dell Technologies, the Round Rock, Texas-based computer hardware and server products company, has raised its full-year forecast for revenue and profit. This comes as the company capitalizes on the artificial intelligence (AI) boom and experiences stabilizing demand for its products after a prolonged slump. The news has caused Dell’s shares to rise by 8 percent in extended trading, signifying a positive shift in the tech spending landscape. The results follow Cisco’s success in beating quarterly revenue estimates, further indicating a potential end to the downturn in technology spending.
Dell Technologies is expected to see increased demand for its PowerEdge servers and generative AI designs with Nvidia, as large technology firms ramp up their investments in AI. The company’s Chief Operating Officer, Jeff Clarke, commented on the positive impact of AI, stating, AI is already showing it’s a long-term tailwind, with continued demand growth across our portfolio.
In their latest forecast, Dell expects third-quarter revenue to range between $22.5 billion and $23.5 billion, surpassing analysts’ estimates of $21.67 billion based on Refinitiv data. Additionally, Dell predicts earnings per share of $1.45, plus or minus 10 cents, compared to the estimated $1.38.
For the full year, Dell’s revenue expectations lie between $89.5 billion and $91.5 billion, with earnings per share of $6.30, plus or minus 20 cents. These revised forecasts indicate a confident outlook for the company.
The results for the second quarter indicate substantial growth for Dell, with servers and networking revenue increasing by 11 percent from the previous quarter to $4.27 billion. This surge is attributed to the higher demand for AI-optimized servers, a trend that Dell intends to leverage moving forward. Additionally, revenue for Dell’s client solutions group (CSG), which encompasses both consumer and enterprise PC business, rose by 8 percent to $12.94 billion compared to the previous quarter.
Mikako Kitagawa, an analyst at Gartner, commended Dell’s profitability amidst a challenging market environment, emphasizing the company’s ability to maintain 7.5 percent of operating profits, further illustrating their profitability first approach.
These positive results contrast with Dell’s rival, HP, which recently downgraded its annual forecast due to decreased PC demand and weakness in China.
Overall, Dell Technologies’ strong performance and increased revenue and profit forecast indicate that they are well-positioned to capitalize on the boom in AI and the recovery of the computer hardware and server market. As the demand for AI continues to surge and stabilize, Dell is expected to see further growth in its portfolio.
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