Dell Technologies’ shares saw a 6% increase in premarket trading last Friday, following the company’s decision to up its annual earnings and revenue projections due to strong demand for its AI-based servers. Dell, a supplier of servers and related infrastructure to businesses, enhanced its commitment to AI through a collaboration with chip heavyweight Nvidia earlier this year. By utilising Nvidia’s technology, Dell has been successful in drawing in medium-sized customers to enhance their servers with AI functionalities.
According to Bernstein analysts, Dell’s financial success can be entirely credited to AI servers, despite PC revenues and storage falling short of consensus. It’s estimated that between 80 to 90% of the company’s server clients are tier 2 cloud service suppliers and there seem to be new competitive bid opportunities against Super Micro Computer.
Dell’s infrastructure solutions group, responsible for server sales, witnessed a 38% year on year growth in the second quarter. Demand for AI-streamlined servers, including Dell’s main PowerEdge XE9680, surged by 23% on a sequential basis to $3.2 billion (€2.9 billion), the company announced last Thursday.
The company’s AI project is now projected to be between $11 billion and $13 billion, which is a significant improvement from the first quarter’s estimate of $8 billion to $10 billion, according to Bernstein.
Overall, Dell made $1.89 per share on an adjusted basis and registered revenue of $25.03 billion, both surpassing LSEG’s estimates. Post Dell’s results, at least three brokerages have boosted their price goals. The stock has an average target price of $155, and 19 out of 22 analysts have rated it a “buy” or higher, as per LSEG’s data.
Dell shares, currently at $117.29, have experienced a 35% decrease since reaching their record high in May, according to Reuters.
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