Dell Shares Dip Despite 10% Revenue Growth Driven by AI Server Demand
Dell's Q3 revenue growth falls short of analyst forecasts despite strong AI-driven server sales, causing a post-market stock decline.
Dell Technologies (DELL) reported third-quarter revenue that, while showing a solid 10% year-over-year increase to $24.4 billion, did not meet analysts' expectations, leading to a 6% drop in shares during after-hours trading on Tuesday.
The company’s net income rose to $1.13 billion, or $1.58 per share, surpassing prior year figures and analyst estimates, reflecting operational strength despite revenue shortfall.
Robust AI Server and Networking Sales Boost Infrastructure Revenue
Driven by surging demand for artificial intelligence (AI) servers, Dell’s server and networking segment revenue soared 58% to $7.36 billion. This contributed to a 34% rise in the infrastructure solutions group revenue, reaching $11.37 billion.
Dell’s collaboration with Nvidia (NVDA), whose AI chips power many of Dell’s servers, was highlighted during Nvidia’s recent earnings call, underscoring the strategic importance of AI technology in Dell’s growth.
Despite the stock dip post-earnings, Dell shares have gained 85% year-to-date, reflecting strong investor confidence in its AI-driven infrastructure business.
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