Financial Performance
Dell Technologies has exceeded market expectations with its latest quarterly earnings report, showcasing a robust demand for AI servers. Despite a year-over-year revenue decline of 11%, the company’s fourth-quarter revenue stood at $22.3 billion – comfortably within the projected range of $21.5 billion to $22.5 billion, and surpassing Wall Street’s consensus of $22.2 billion.
Earnings Beat
Earnings per share on an adjusted basis were $2.20, significantly surpassing the expected $1.73 per share. Dell attributes this success to factors such as a lower-than-expected tax rate, reduced operational expenses, and revenue exceeding projected figures.
Surge in AI Server Backlog
An outstanding highlight from the quarter is Dell’s AI server backlog, which has surged to $2.9 billion compared to $1.6 billion in the previous quarter and $800 million two quarters ago. The company has successfully shipped $1.5 billion worth of AI servers in the last two quarters and anticipates further growth given the overwhelming interest in their AI server offerings.
Future Prospects
Dell also shared insights into its supply chain improvements for Nvidia’s H100 chips, accompanied by an increased demand for servers featuring AMD’s upcoming MI300 chip and the next iteration of Nvidia chips.
By capitalizing on the escalating need for advanced technology solutions, Dell Technologies continues to solidify its position as a key player in the evolving landscape of AI servers and enterprise computing.
Dell Reports Decline in Client Solutions Group Revenue
Dell recently announced that its client solutions group revenue, mainly from PCs, reached $11.7 billion. This reflects a 12% decrease compared to the previous year and a 5% drop sequentially, aligning with the trend noted in the latest quarter by competitor HP Inc.
Outlook on PC Demand
Regarding PC demand, Dell noted that significant corporate purchasers are exercising caution due to the current global geopolitical and macroeconomic landscape. However, the company anticipates an upcoming refresh cycle as laptops from the Covid era age. Dell is preparing to introduce new AI-powered PCs in the latter part of the year, expecting gradual adoption over several quarters.
Infrastructure Solutions Group Performance
In contrast, Dell’s infrastructure solutions group—which encompasses enterprise servers, storage, and networking equipment—achieved $9.3 billion in revenue during the period. This exceeded market expectations set at $9 billion. Although revenue saw a 6% decline year-over-year, it saw a notable 10% sequential increase, surpassing the mid-single digits growth projected by the company.
Dividend Update
Dell announced a new quarterly dividend rate of 44.5 cents. The initial payment at this rate is scheduled for May 3, with record holders as of April 23 eligible to receive it. Consequently, the stock presently boasts a yield of approximately 1.9%.