Dell Technologies raised its full-year revenue and profit forecast on Thursday, benefiting from a boom in artificial intelligence (AI) 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 after-hours trading. The results were the latest sign that a downturn in tech spending may be coming to an end, after major networking equipment provider Cisco also beat quarterly revenue estimates.

The company expects to see increased demand for its PowerEdge servers and generative AI designs in partnership with Nvidia due to growing investments in artificial intelligence by big tech companies.

Chief Operating Officer Jeff Clarke said: “Artificial intelligence has shown that it is a long-term driver, and our product portfolio continues to grow in demand.”

The company forecast third-quarter revenue of between $22.5 billion (Rs. ). Refinitiv data. Dell forecast earnings per share of $1.45 (roughly Rs. 120), plus or minus 10 cents compared to estimates of $1.38 (roughly Rs. 114).

Dell now expects full-year revenue of $89.5 billion (Rs. 740.57 crore) to $91.5 billion (Rs. 756.595 crore) and earnings per share of $6.30 (Rs. 521), plus or minus 20 cents.

Dell reported second-quarter revenue and earnings per share that topped analysts’ expectations.

Dell said server and networking revenue was $4.27 billion (Rs 35,295.3 crore) in the second quarter, up 11 percent from the first quarter, driven by higher demand for AI-optimized servers.

Revenue from the company’s Client Solutions Group (CSG), where the consumer and enterprise PC businesses are located, rose 8 percent from the first quarter to $12.94 billion (Rs. 1,069.74 billion).

Gartner analyst Mikako Kitakawa said that in this challenging market environment, Dell maintained an impressive 7.5% operating margin versus revenue (CSG), illustrating the company’s “profit-first approach.”

The result was in stark contrast to rival HP, which cut its annual forecast due to slumping demand for PCs and weakness in the Chinese market.

© Thomson Reuters 2023

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