(Bloomberg) — Dell Technologies Inc. reported its first revenue increase since 2022, but it wasn’t enough to impress investors with high expectations for the company’s AI-optimized server business. The shares declined more than 10% in extended trading.
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Sales increased 6.3% to $22.2 billion in the period ended May 3, the Round Rock, Texas-based company said Thursday in a statement. Analysts, on average, estimated $21.6 billion. Profit, excluding some items, was $1.27 a share, compared with the average projection of $1.23.
Revenue from shipping servers optimized for artificial intelligence tasks more than doubled from the previous quarter to $1.7 billion, Chief Operating Officer Jeff Clarke said in the statement. The backlog for those machines increased more than 30% quarter-over-quarter to $3.8 billion, he added.
Total sales at Dell’s infrastructure unit, which includes servers and networking and storage equipment, jumped 22% to $9.2 billion.
Shares dropped to a low of $146 in extended trading after closing at $169.92 in New York. Dell’s stock has more than tripled over the past 12 months as investors have come to see the hardware maker as a beneficiary of demand for artificial intelligence. Large corporations increasingly need high-powered servers to train and run demanding generative AI tasks, which are sold by Dell and few other companies.
For its better-known business of selling personal computers, Dell reported $12 billion in revenue, little changed from the same period a year earlier. Sales of business PCs increased 3% to $10.2 billion, surprising analysts who expected a 2% drop.
The PC market had seen a historic decline over the last two years after many consumers, businesses and schools purchased laptops in the early months of the pandemic. In the first quarter, shipments picked up 1.5% — the first increase since the end of 2021 — industry analyst IDC said in April.
PC-makers have been hopeful those numbers signaled the end of the slump and that growth would accelerate in 2024 with the launch of machines equipped with a new version of Microsoft Corp.’s Windows software as well as hardware equipped with chips to handle artificial intelligence tools.
Dell’s primary PC competitor, HP Inc., reported signs of a recovering computer market Wednesday, sending its shares up 17% on Thursday.
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