Dell posts mixed results with stronger guidance for the next quarter
Dell reported fiscal third-quarter earnings that came in below Wall Street revenue expectations, while issuing a fourth-quarter forecast that exceeded analyst estimates due to rising demand for AI systems. The company’s shares rose 5% in extended trading following the announcement.
Quarterly performance versus expectations
Here’s how Dell performed compared with LSEG consensus estimates:
- EPS: $2.59 adjusted vs. $2.47 estimated
- Revenue: $27.01 billion vs. $27.13 billion estimated
Dell posted $1.54 billion in net income, or $2.28 per diluted share, compared with $1.17 billion, or $1.64 per diluted share, in the same quarter last year. Overall revenue rose 11% year over year.
Raised outlook driven by AI server demand
Dell said it expects about $31.5 billion in fourth-quarter revenue, ahead of the $27.59 billion analyst estimate. The company projected fourth-quarter earnings per share of $3.50 versus the $3.21 expected. Dell also raised its full-year revenue outlook to $111.7 billion, up from $107 billion.
The company increased its forecast for AI server shipments this year to $25 billion, up from $20 billion. Dell said it expects to sell $9.4 billion of AI servers in the fourth quarter. That figure does not include a deal announced in November to supply Nvidia-based GB300 systems to Iren, a neocloud that intends to rent the systems to Microsoft.
AI infrastructure momentum and customer mix
Dell serves as a bellwether for AI infrastructure demand because it is one of the top vendors supplying systems built around Nvidia’s graphics processors. Its largest AI system customers include big enterprises, governments, and neocloud providers such as CoreWeave. The company sells comparatively fewer systems to hyperscalers, which have dominated Nvidia purchases across the industry.
Business segment performance
Dell’s Infrastructure Solutions Group, which includes data center products, reported $14.11 billion in sales, in line with analyst estimates. Of that total, $10.1 billion came from servers and networking equipment, a 37% year-over-year increase driven by $5.6 billion in AI server shipments. The company reported $4 billion in storage revenue.
Dell’s Client Solutions Group, which includes laptops and PCs, posted $12.48 billion in revenue, up 3% from a year earlier but below the $12.65 billion expected. The company said the segment’s laptop and PC category declined 7% year over year.
Capital returns
Dell said it returned $1.6 billion to shareholders during the quarter through share repurchases and dividends.
Featured image credits: Wikimedia Commons
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