Dell Technologies (DELL) has reported first-quarter financial results that beat Wall Street forecasts on the top and bottom lines as demand grows for its artificial intelligence (A.I.) servers.
The Austin, Texas-based company run by founder Michael Dell reported earnings per share of $1.27 U.S. versus $1.26 U.S. that had been expected among analysts.
Revenue in the year’s first three months totaled $22.24 billion U.S. compared to $21.64 billion U.S. that had been estimated on Wall Street. Sales were up 6% from a year ago.
The company said shipments of it’s A.I.-optimized servers rose more than 100% sequentially to $1.70 billion U.S.
Dell’s backlog of orders for it’s A.I. servers increased 30% during Q1 of this year to $3.80 billion U.S. from $2.90 billion U.S. at the end of the previous quarter.
Dell has emerged as a leading vendor for A.I. servers, which are in high demand as companies invest in infrastructure to support generative A.I. applications and models.
Dell’s data centre sales, which include the A.I. servers, saw sales increase 22% on an annual basis to $9.20 billion U.S. during Q1.
The company said A.I. server sales rose 42% to $5.50 billion U.S. and demand is strengthening.
While Dell’s A.I. sales were brisk, its personal computer (PC) and laptop unit saw flat growth on an annual basis during the quarter with sales of $12 billion U.S.
In terms of forward guidance, Dell said that it expects earnings of $1.65 U.S. per share and between $23.50 billion U.S. and $24.50 billion U.S. of sales for the current second quarter.
Analysts had forecast Q2 sales of $23.35 billion U.S.
For the entire fiscal year, Dell forecast revenue of $93.50 billion U.S. to $97.50 billion U.S. The company expects profits for the year of $7.65 U.S. a share, give or take $0.25 U.S.
Despite the earnings beat and raised guidance, Dell’s stock is down 15% in after hours trading. The results were not as strong as some investors had hoped to see from the company.
Analysts are speculating that the stock’s decline is also due to profit taking as Dell’s shares had more than doubled in price this year leading into the Q1 print.
Prior to today (May 31), Dell’s stock had increased 279% over the last 12 months, including a 127% rise year to date, and was trading at $169.92 U.S. per share.
