“`html
A Dell Technologies sign is seen in Round Rock, Texas, on June 2, 2023.
Brandon Bell | Getty Images
Dell Technologies (DELL) shares dipped over 5% in after-hours trading Thursday, despite the tech giant surpassing both revenue and earnings expectations. Investors appeared to react negatively to the company’s third-quarter earnings per share guidance, which landed below analysts’ consensus estimates.
Here’s a look at how Dell performed against LSEG (formerly Refinitiv) consensus estimates:
- EPS: $2.32, adjusted vs. $2.30 estimated
- Revenue: $29.78 billion vs. $29.17 billion estimated
Dell revised its full-year revenue outlook upward to $107 billion at the midpoint and diluted earnings per share to $9.55 at the midpoint, exceeding Wall Street anticipations of $104.6 billion and $9.38 per share, respectively.
However, the projected third-quarter earnings per share of $2.45 fell short of the LSEG estimate of $2.55, even though Dell’s revenue guidance of $27 billion for the same period topped expectations of $26.1 billion. This discrepancy raised concerns among investors regarding near-term profitability.
The company attributed the profit forecast’s concentration in the fourth quarter to typical seasonal patterns, particularly within its storage solutions segment. This explanation, however, failed to fully assuage market anxieties.
The second quarter witnessed a robust 19% year-over-year surge in overall revenue. This growth was significantly fueled by the Servers and Networking division, including AI servers, which soared by an impressive 69% annually to reach $12.9 billion. This segment is rapidly becoming a cornerstone for Dell.
Dell’s strategic alliance with Nvidia remains pivotal. As a key customer, Dell leverages Nvidia’s advanced chip technology to construct high-performance computing solutions, catering to end-users like CoreWeave, a prominent cloud service provider. In the past two quarters alone, Dell reported shipping $10 billion worth of AI servers, highlighting the booming demand for AI infrastructure.
Looking ahead, Dell intends to double its AI server shipments to $20 billion in fiscal year 2026, underscoring its commitment to the burgeoning artificial intelligence market and signaling significant future investments.
On the downside, Dell’s storage revenue experienced a 3% decline, settling at $3.86 billion. This figure missed the StreetAccount estimate of $4.1 billion, potentially contributing to investor unease despite the overall positive earnings report.
The Client Solutions Group, encompassing PC sales to enterprises, saw a modest 1% increase in revenue, reaching $12.5 billion. While traditionally Dell’s largest revenue stream, this segment’s growth has relatively slowed compared to the more dynamic data center business, reflecting shifting market priorities.
During the quarter, Dell allocated $1.3 billion to share repurchases and dividends, demonstrating a commitment to returning capital to shareholders.
“`
Original article, Author: Tobias. If you wish to reprint this article, please indicate the source:https://aicnbc.com/8225.html
