Dell shares fall on light revenue despite growing AI sales

Dell Technologies reported quarterly earnings on Tuesday that beat analyst expectations for earnings per share but came up light on overall revenue. Shares fell 6% in after-hours trading.

Here's how Dell did for the fiscal third quarter versus LSEG consensus estimates for the quarter ending Nov. 1:

Net income climbed 12% to $1.12 billion, or $1.58 per share, from about $1 billion, or $1.36 per share, in the year-ago period. Overall revenue increased about 10% from $22.25 billion a year ago.

Dell will give a forecast for how it sees the current quarter shaping up on the call.

The company's shares have risen 86% so far in 2024 as investors realize it's one of the most important companies selling tools and systems for artificial intelligence developers.

Dell is a top vendor for computer clusters required to develop and deploy artificial intelligence, especially computers based around Nvidia chips. It competes against other server makers such as Supermicro and HPE, as well as manufacturers in Asia.

Demand for Nvidia's AI accelerators remains high from cloud providers, enterprises, and government institutions, who often buy systems installed with tens of thousands of AI chips. Dell sells the completed systems.

This year, Nvidia CEO Jensen Huang hailed Dell and its founder Michael Dell as the company to contact to place orders for its new Blackwell AI chips.

"AI is a robust opportunity for us with no signs of slowing down," said Dell chief operating officer Jeff Clarke in a statement.

Dell's AI server sales are reported in the company's Infrastructure Solutions Group (ISG), which includes AI servers, storage, networking components, and traditional servers. The group's revenue rose 34%, mostly driven by AI sales, to $11.4 billion.

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