Dell Technologies raised its full-year forecasts for revenue and profit on Thursday, boosted by the artificial intelligence (AI) boom and stabilizing demand for computer hardware and server products after a months-long slump. After the results were released, the Round Rock, Texas-based company’s stock rose 8% in extended trading. It’s the latest sign that a downturn in tech spending could be drawing to a close after primary networking equipment provider Cisco recently beat quarterly revenue estimates.
Revenue for the third quarter is expected to be between $22.5 billion and $23.5 billion, surpassing analysts’ average estimate. Dell’s client solutions group, which includes consumer and enterprise PCs, saw a second-quarter revenue rise of 8% from the previous quarter. The Infrastructure Solutions group, which encompasses servers and storage, posted a 12% increase in sales. Company officials said its revenue gains were supported by a more stable supply chain that eased pressure on component and freight costs.
The positive outlook comes as Dell shifts its focus to its consumption services business, which provides software and hardware in a subscription model. That business is expected to generate significant growth as companies seek to lower costs and focus more on developing new technologies. The change in strategy was sparked by a growing number of customers looking for more streamlined billing and service options, which led to Dell’s recent announcement of an agreement with Microsoft.
Analysts praised the results, especially the company’s ability to maintain a healthy operating profit margin despite a challenging market environment. The 7.5 percent operating profit-to-revenue ratio sharply contrasts rival HP Inc., which recently reduced its annual forecast due to weak PC demand and weakness in China.
Michael Dell, chairman and chief executive officer of Dell Technologies, also touted the company’s efforts to boost its workforce. He said that the company is hiring for thousands of positions across its businesses, including in IT, finance, human resources, and sales. “Dell is building an organization for the future that is capable, agile, and ready to meet the demands of our customers,” he said.
During the call, Dell also addressed comments from Elon Musk, who compared AI to an atomic bomb and suggested that it should be regulated. When asked whether he agreed with those views, Dell responded that while AI has risks, the company believes it can also be used for good. “I think it’s important to have a balance and use it responsibly,” he said. “We’re focused on the responsibility of AI, and it’s a long-term tailwind for us.” The company did not comment further on Musk’s remarks. Shares of Dell closed up 4.7% at $18.90 on Wednesday, up 35% this year. The stock is traded on the Nasdaq Global Select Market.
