Michael Dell, chairman and CEO of Dell Technologies, speaks at Mobile World Congress 2024 in Barcelona, Spain, on February 27, 2024.
Joan Cross | norphoto | Getty Images
Dale On Thursday, it reported first-quarter earnings that beat analyst estimates for earnings and sales, as the company emerged as one of the top sellers of artificial intelligence servers. But shares fell more than 15% in after-hours trading on concerns that Dell's AI servers aren't making the company much money yet.
Here's how Dell compares to LSEG consensus estimates:
Earnings per share: $1.27 adjusted vs. $1.26 estimated revenue: $22.24 billion vs. $21.64 billion estimated
The company said it expects current quarter earnings of $1.65 per share, and between $23.5 billion and $24.5 billion in sales. Analysts polled by FactSet had expected $23.35 billion. Dell guided for sales of between $93.5 billion and $97.5 billion for the entire fiscal year.
Dell reported $955 million in net income during the quarter, or $1.32 per diluted share, versus $578 million, or 79 cents, in the same period a year ago. Total sales during the quarter increased 6% year over year.
Dell's division, which includes data center sales, called Infrastructure Solutions Group, saw sales rise 22% year over year to $9.2 billion. The company said servers were a fast-growing unit, with sales rising 42% to $5.5 billion, and called for strong demand for AI servers. However, the unit's year-over-year operating profits remained flat, “resurfacing concerns about AI servers being sold at near-zero profit margins,” Bernstein's Tony Sacconaghi said in a note to investors on Friday morning.
Dell has emerged as a top seller for AI-oriented servers, which are in high demand as companies invest in predictive infrastructure and generative AI. Earlier this year, Nvidia CEO Jensen Huang called on Dell founder Michael Dell at a conference as the person to contact to place orders for the company's new chips.
Dell said it recorded $2.6 billion in orders for “AI-optimized” servers during the quarter.
Before Thursday's report, Dell shares had more than doubled in 2024.
Dell's PC and laptop division, called Client Solutions Group, showed steady year-over-year growth with sales of $12.0 billion.
