Dell Technologies reported its fiscal third-quarter earnings with mixed results. The company missed Wall Street’s revenue expectations but surpassed earnings per share (EPS) estimates.
Dell posted an adjusted EPS of $2.59, beating the consensus of $2.47. Revenue reached $27.01 billion, slightly below the projected $27.13 billion.
The net income for the quarter was $1.54 billion, or $2.28 per diluted share. This improved from $1.17 billion, or $1.64 per share, in the same period last year.
Strong Outlook for Fourth Quarter
Dell forecasted robust growth for the upcoming quarter, projecting $31.5 billion in sales. Analysts had estimated $27.59 billion in revenue, marking a significant positive outlook.
The company anticipates fourth-quarter EPS of $3.50, well above the $3.21 expected by the market. This optimism mainly stems from heightened demand for AI-related products.
AI Sales Drive Performance
Dell raised its full-year revenue guidance to $111.7 billion from $107 billion, reflecting confidence in AI infrastructure growth. Sales of AI servers are now expected to reach $25 billion, up from the prior estimate of $20 billion.
The Infrastructure Solutions Group generated $14.11 billion in sales. Server and networking sales grew 37% year-over-year to $10.1 billion, fueled by $5.6 billion in AI server shipments.
Mixed Results in Laptop and PC Segment
The Client Solutions Group, responsible for laptops and PCs, saw $12.48 billion in revenue, up 3% annually but slightly below analyst expectations of $12.65 billion. Notably, Dell’s laptop and PC sales fell by 7% compared with the previous year.
Customer Base and Market Strategy
Dell focuses on large enterprises, governments, and neoclouds like CoreWeave for its AI systems. This differs from hyperscalers, which are the primary buyers of Nvidia technology but less of Dell’s direct customers.
The company expects to sell $9.4 billion worth of AI servers next quarter. This figure excludes a recent deal to supply Nvidia-based systems to Iren, a neocloud that plans to rent these to Microsoft.
Shareholder Returns
During the quarter, Dell spent $1.6 billion on share repurchases and dividends. This continues Dell’s commitment to returning value to shareholders despite fluctuating revenue.
