(Reuters) -Dell Technologies beat Wall Street estimates for first-quarter revenue on Thursday, ending a streak of six-quarters of decline, but its results fail to impress investors, sending its shares down more than 13% in extended trading.
A surge in demand for high-performance computing and large-scale data centers to support growing adoption of generative AI has spurred investments in AI-capable products, triggering demand for servers offered by companies such as Dell.
The results come days after Dell unveiled a range of AI-enabled PCs powered by Qualcomm processors and said that a new server, which supports Nvidia’s latest chips, will be available from the second half of 2024.
Shipments of the company’s AI-optimized servers more than doubled to $1.7 billion, and the backlog grew more than 30% to $3.8 billion, Chief Operating Officer Jeff Clarke said in a statement.
The availability of AI PCs is expected to boost demand for PC makers, helping the market rebound from a lull in orders after the pandemic-driven buying spree.
Fueled by optimism about demand for its AI-optimized servers, Dell’s stock has more than doubled this year and hit a record high earlier this week.
Peer HP Inc beat estimates for second-quarter revenue on Wednesday, signaling a recovery in the PC market.
Dell’s revenue for the first quarter ended May 3 rose about 6% to $22.24 billion, beating analysts’ average estimate of $21.64 billion, according to LSEG data.
Excluding items, its first-quarter adjusted profit came in at $1.27 per share, compared with estimate of $1.26 per share.
The company’s revenue for infrastructure solutions group – which includes its storage, software and server offerings – rose 22% to $9.23 billion, while that of the client solutions group – home to PCs, was flat at $11.97 billion.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Alan Barona)
