Dell's quarterly results released on Thursday (August 29) exceeded Wall Street's expectations, mainly due to an 80% increase in sales of artificial intelligence servers.
The report shows that the revenue for the second quarter was $25.06 billion, higher than the expected $24.53 billion, an increase of about 9% compared to the same period last year's $22.93 billion; Adjusted earnings per share of $1.89, expected to be $1.71; Net profit increased by 85% to $841 million, or $1.17 per share.
Dell has also revised its full year financial forecast to $95.5-98.5 billion, a slight increase from the previous estimate. Earlier this year, the company told investors that it expected its full year revenue for this fiscal year to be between $93.5 billion and $97.5 billion, up from $88.4 billion the previous year.
The company also expects its current third quarter revenue to be between $24 billion and $25 billion, which is in line with analysts' estimate of $24.6 billion.
As soon as the financial report was released, the stock rose more than 3% in after hours trading. Since the beginning of this year, Dell's stock price has risen by 48%.
AI server
The most notable aspect of Dell's report is server and networking revenue, which includes both AI oriented servers based on Nvidia and AMD GPUs, as well as traditional servers used for older applications.
The sales revenue of the server department in the second quarter was 7.76 billion US dollars, a year-on-year increase of 80%, exceeding the expected 6.37 billion US dollars. Dell stated that $3.1 billion was sales of artificial intelligence servers, up from $1.7 billion in the previous quarter.
Dell's Chief Operating Officer Jeff Clark said during a earnings conference call with analysts, "We are competing in all major AI deals and winning large-scale deployments
Clark attributed the revenue growth to the continued increase in server demand and stated that there is a backlog of up to $3.8 billion in unfinished AI server orders. In addition, there are billions of dollars in AI server transactions from enterprises and cloud providers that have not yet been finalized.
With the soaring demand from cloud providers, Dell has become the top supplier of servers capable of handling artificial intelligence workloads, especially those based on Nvidia chips.
Earlier this year, Nvidia CEO Renxun Huang also partnered with Dell founder Michael Dell to announce the launch of the Dell AI factory, stating that Dell is the industry's first company to provide end-to-end enterprise AI solutions.
However, in the more well-known computer business, Dell's sales in this department decreased by 4% year-on-year to $12.4 billion, slightly lower than expected. Commercial computer sales remained relatively stable, while personal computer revenue decreased by 22% year-on-year.