In a remarkable turn of events, Dell Technologies witnessed a surge of more than 15% in its stock value during extended trading on Thursday. The spike followed the release of the company’s fourth-quarter results, which not only surpassed analysts’ estimates but also highlighted robust demand for its artificial intelligence (AI) servers. The stellar performance has rekindled investor confidence in the technology giant.
Dell’s earnings per share (EPS) for the fourth quarter stood at an impressive $2.20, surpassing the expected $1.73, as projected by LSEG (formerly Refinitiv). The company’s revenue also outperformed expectations, reaching $22.32 billion compared to the projected $22.16 billion by LSEG. While the fiscal 2024 fourth-quarter revenue experienced an 11% decline from the previous year, dropping to $22.32 billion from $25.04 billion, Dell reported a substantial increase in net income. The net income soared by 89%, reaching $1.16 billion, a notable improvement from the $614 million reported in the corresponding period the previous year.
The company’s Chief Financial Officer, Yvonne McGill, expressed confidence in Dell’s future prospects, announcing a 20% increase in the annual dividend to $1.78 per share. McGill referred to this move as a testament to their confidence in the business, signaling positive sentiments within the company about sustained growth.
Business Segments Performance
Dell’s Infrastructure Solutions Group (ISG) reported a total revenue of $9.3 billion for the quarter, reflecting a 6% decline compared to the previous year but a substantial 10% increase from the third quarter. Notably, the servers and networking segment played a pivotal role, contributing $4.9 billion to the revenue, driven primarily by the demand for AI-optimized servers. Storage revenue, another crucial component of ISG, amounted to $4.5 billion.
On the other hand, the Client Solutions Group (CSG) reported a revenue of $11.7 billion for the quarter, experiencing a 12% year-over-year decline. The commercial client revenue accounted for $9.6 billion, representing an 11% drop from the fourth quarter of the previous year. Consumer revenue was reported at $2.2 billion, reflecting a 19% year-over-year decrease.
Despite the challenges faced by CSG, Chief Operating Officer Jeff Clarke highlighted the robust momentum in AI-optimized server orders, with a nearly 40% sequential increase and backlog doubling, reaching $2.9 billion by the end of the fiscal year.
Dell Technologies Outlook and Future Prospects
Looking ahead, Dell Technologies expressed optimism during its quarterly call with investors, anticipating revenue in the range of $21 billion to $22 billion for the first quarter. The company emphasized its encouragement by the growing momentum around AI and signaled its expectation to return to growth in fiscal 2025. However, Dell acknowledged that the current macroeconomic environment has led some customers to exercise caution regarding infrastructure costs.
