Dude, you’re not getting a Dell. So why is its stock soaring?
Dell laptops are seen on display at a Best Buy store on June 02
By Ramishah Maruf, CNN
New York (CNN) — It’s not a good time to be selling PCs — Dell has been grappling with sinking demand for the past few years. But its stock still shot up 20% in after-hours trading after the company excited investors about the tech industry’s favorite buzzwords: artificial intelligence.
Dell revenue declined 11% in the fourth quarter. Although that was better than forecast, Dell’s PC business is lagging. Still, the Texas-based firm noted demand for powerful servers to run AI workloads surged in the last three months. Its infrastructure unit pulled in $9.3 billion in revenue, with its 10% growth from the previous quarter “driven primarily by AI-optimized servers” (however, it is down 6% year-over-year).
Dell Technologies shares, which reached a record high close to cap Thursday’s trading session, rose almost 20% in after-hours trading.
“We’ve just started to touch the AI opportunities ahead of us, and we believe Dell is uniquely positioned with our broad portfolio to help customers build GenAI solutions that meet performance, cost and security requirements,” Jeff Clarke, the company’s chief operating officer, said in a statement Thursday.
Nvidia, the AI chip leader, has leapfrogged giants like Amazon to become one of the world’s most valuable companies. But demand for hardware to make AI a reality is higher than Nvidia is able to produce. That means there’s an opportunity for companies like Dell to fill the gap.
That’s good news for Dell, because its primary business has struggled since the Covid-era PC boom. Consulting firm Gartner found that 2023 was the worst year for PCs in history, declining 14.8%. It was the second year in a row with a double-digit decline. Dell in particular declined almost 20%.
However, PC shipments did increase in the fourth quarter of 2022, the first time it has increased after eight straight quarters of decline.
“PCs will become even more essential as most day-to-day work with AI will be done on the PC,” Clarke said in prepared remarks for the company’s earnings call Thursday.
Dell’s computer revenue fell 12% to $11.7 billion, “largely driven by a decline in units,” the company said in Thursday’s earnings release.
– CNN’s Krystal Hur contributed to this report.
The-CNN-Wire
™ & © 2024 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.
