(Reuters) -Dell Technologies raised its annual revenue and profit forecasts on Thursday, buoyed by growing demand for its AI-powered servers, sending its shares up about 3% in extended trading.
The Round Rock, Texas-based company has capitalized on increasing demand for its AI servers, which are powered by Nvidia’s graphics processors. These servers are designed to meet the growing computing needs of AI systems, including training language models.
Analysts have said that AI PCs are lucrative for enterprise customers and would trigger a strong upgrade cycle next year amid Microsoft’s upcoming end of support for Windows 10.
The company now expects annual revenue outlook to be between $95.5 billion and $98.5 billion, compared with prior expectations of $93.5 billion and $97.5 billion.
Dell also raised its annual adjusted profit per share forecast to $7.80, plus or minus 25 cents, compared with earlier expectations of $7.65, plus or minus 25 cents.
Demand for its AI-optimized servers rose about 23% sequentially to $3.2 billion in the second quarter. The backlog for these AI servers was $3.8 billion.
“Our pipeline has grown to several multiples of our backlog,” Chief Operating Officer Jeff Clarke said in a statement.
Revenue for the second quarter ended Aug. 2 rose about 9% to $25.03 billion, beating analysts’ average estimate of $24.14 billion, according to LSEG data. It reported adjusted profit per share of $1.89 per share, compared with estimates of $1.71 per share.
Dell’s revenue for the infrastructure solutions group, which includes its storage, software and server offerings, rose about 38% to a record $11.65 billion. In contrast, revenue for the client solutions group – home to PCs – fell about 4% to $12.41 billion.
The company took a $328 million charge for workforce reductions in the second-quarter, CFO Yvonne McGill said.
The results come after a Reuters exclusive report that said Dell is again exploring a possible sale of cybersecurity firm SecureWorks, following previous unsuccessful attempts to find a buyer.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Tasim Zahid)
