DELL shares tumble as solid results, AI server orders fail to satisfy investors

Investing.com
Updated May 31, 2024 01:56
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Dell Technologies (NYSE:DELL) shares plummeted by 11.5% in afterhours Thursday trading despite the company reporting a solid set of Q1 results.


The technology giant announced first-quarter revenue of $22.2 billion, a 6% increase from the same quarter last year, surpassing the consensus estimate of $21.65 billion.


The company's Infrastructure Solutions Group (ISG) was a standout performer, with revenue climbing 22% YoY to $9.2 billion, bolstered by a record 42% increase in servers and networking revenue, which hit $5.5 billion.


However, the Client Solutions Group (CSG) revenue remained flat YoY at $12.0 billion, with commercial client revenue seeing a modest 3% rise.


Dell's adjusted earnings per share (EPS) for the quarter was $1.27, slightly above the analyst estimate of $1.25 but marked a 3% decrease from the previous year. 


Most importantly, AI server orders came in at $2.6 billion, rising about $500 million from the last quarter. Goldman Sachs (NYSE:GS) was expecting $2.1 billion in Q1 AI server orders.


"While we’re encouraged by DELL’s AI server momentum, the $2.6 bn of orders likely disappointed high investor expectations; DELL stock is up 36% month-to-date and 127% year-to-date," Goldman Sachs analysts said in a note. 


CFO Yvonne McGill highlighted the company's execution and cash flow, noting the role of AI in driving new growth.


"Revenue was up 6% at $22.2 billion, servers and networking revenue was up 42%, and we generated $7.9 billion of cash flow from operations over the last 12 months," McGill stated.


* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

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