© Reuters. The logo for Dell Technologies Inc. is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 10, 2019. REUTERS/Brendan McDermid
By Zaheer Kachwala
(Reuters) – Dell Technologies (NYSE:) raised its full-year forecast for revenue and profit on Thursday, as it benefited from the artificial intelligence (AI) boom and stabilizing demand for computer hardware and server products after a months-long slump.
Shares of the Round Rock, Texas-based company rose 8% in extended trading.
The results are the latest sign that a downturn in tech spending could be drawing to a close after major networking equipment provider Cisco (NASDAQ:) also beat quarterly revenue estimates.
The company is expected to see a demand boost for its PowerEdge servers and generative AI designs with Nvidia (NASDAQ:) from rising investments in artificial intelligence by Big Tech companies.
“AI is already showing it’s a long-term tailwind, with continued demand growth across our portfolio,” Chief Operating Officer Jeff Clarke said.
The company forecast third-quarter revenue between $22.5 billion and $23.5 billion beating analysts’ estimates of $21.67 billion, according to Refinitiv data. Dell expects earnings per share of $1.45, plus or minus 10 cents compared with estimates of $1.38.
For the full year, Dell now expects revenue between $89.5 billion and $91.5 billion, and earnings per share of $6.30, plus or minus 20 cents.
Dell reported second quarter revenue and EPS above analyst estimates.
Servers and networking revenue for the second quarter came in at $4.27 billion, up 11% from the first quarter, driven by higher demand for AI-optimized servers, Dell said.
Revenue at the company’s client solutions group (CSG) – home to its consumer and enterprise PC business – rose 8% from the first quarter to $12.94 billion.
Gartner (NYSE:) analyst Mikako Kitagawa said Dell keeping 7.5% of operating profits vs revenue (CSG) is impressive in this challenging market environment illustrating the company’s “profitability first approach.”
The results are in sharp contrast with rival HP Inc (NYSE:) which cut its annual forecast due to a slump in PC demand and weakness in China.
(This story has been refiled to say ‘contrast,’ not ‘contract,’ in paragraph 12)
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