Dell Technologies Inc. reported better-than-expected sales of personal computers and data center hardware, fueling hopes of a recovery in the market for corporate technology. The company also said demand for products that help businesses use artificial intelligence are a “long-term tailwind.”
Fiscal second-quarter revenue dropped 13% to $22.9 billion, the company said Thursday in a statement. That exceeded the $20.8 billion average projection of analysts surveyed by Bloomberg. Profit, excluding some items, was $1.74 a share, beating the average estimate of $1.14.
The computer industry has had a difficult year, experiencing a sharp demand slowdown as the pandemic waned. Dell has responded to the changing market by restructuring its sales organization and cutting roughly 6,650 jobs earlier this year. Dell’s co-Chief Operating Officer Chuck Whitten resigned earlier this month.
Revenue in the computer division declined 16% to $12.9 billion from a year earlier, but the figure topped estimates, and the unit produced a better-than-expected sales performance with consumers and businesses.
The results painted a better picture for the market than that from HP Inc. on Tuesday. The rival computer maker cut its full-year forecast, saying a demand rebound would take longer than previously expected.
Dell’s infrastructure business unit reported $8.5 billion in sales in the period, which ended Aug. 4, compared with the average estimate of $7.3 billion. Servers and networking revenue declined 3% to $4.27 billion, topping analysts’ predictions.
One of the servers Dell says is optimized for generative AI performance has about $2 billion in backlogged orders, Chief Operating Officer Jeff Clarke said in a transcript prepared for a conference call after the results were released. In May, Dell announced a service in collaboration with Nvidia Corp. to help businesses run generative AI in on-premise data centers.
“AI is already showing it’s a long-term tailwind, with continued demand growth across our portfolio,” Clarke said in the statement.
The shares rose about 4.5% in extended trading after closing at $56.24 in New York. The stock has gained 40% this year.