FX168 Financial News (North America) News On Tuesday (November 26), Dell Technologies released fourth quarter financial guidance below market expectations, despite the impressive performance of ai-related businesses, they failed to reverse the market sentiment, causing a significant 10.61% drop in stock price after hours.
(Source: Google)
Dell's third-quarter earnings per share (EPS) reached $2.15, higher than the market's expected $2.06; total revenue was $24.4 billion, slightly below the expected $24.67 billion. Net income increased by 12% year-on-year to $1.12 billion ($1.58 per share), compared to $1 billion ($1.36 per share) in the same period last year.
The company expects fourth-quarter revenue to be between $24 billion and $25 billion, lower than the market's general expectation of $25.57 billion; adjusted EPS is expected to be $2.50, also lower than the expected $2.65.
This weak outlook has raised concerns among investors, especially against the backdrop of the market's high expectations for artificial intelligence. Dell has failed to fully boost confidence.
Despite overall performance guidance falling short of expectations, Dell's artificial intelligence-related business continues to grow strongly. Its Infrastructure Solutions Group (ISG) third-quarter revenue grew by 34% to $11.4 billion, with server and networking sub-sector revenue surging by 58% to $7.4 billion.
Dell's AI server sales this quarter reached $2.9 billion, with future orders already at $3.6 billion. The overall AI systems business is reflected in a cumulative order of $4.5 billion.
Chief Operating Officer Jeff Clarke stated in a conference call that with the launch of Nvidia's Blackwell AI chip, some customer demands are shifting towards the next few quarters. He emphasized that the growth of the AI business will exhibit non-linear fluctuations.
Dell's personal computer business continues to underperform. Revenue from the Customer Solutions Group (CSG) decreased by 1% year-on-year to $12.1 billion. Among them, enterprise customer spending increased by 3% to $10.1 billion, but consumer-side personal computer sales dropped by 18% to $2 billion.
Traditional server business also achieved double-digit growth due to datacenter optimization and the shift in demand towards AI systems, while computer storage systems performed averagely, with only a 4% increase to $4 billion.
Although Dell holds a leading position in the field of artificial intelligence, becoming the main supplier of AI systems based on Nvidia chips, market doubts about its short-term profitability have weighed down on its stock performance. Dell's stock price has risen by 86% year-to-date in 2024, but how to find a balance between traditional business and emerging markets in the future remains a key concern for investors.
This financial report highlights the complex game between the market's long-term prospects driven by artificial intelligence and the short-term financial fluctuations.
