Investing.com — Dell Technologies reported Thursday second-quarter results that topped Wall Street estimates, driven by record revenue in its infrastructure solution business as strong demand for its artificial intelligence-optimized servers boosted performance. The company also hiked its annual earnings forecast.
Dell Technologies Inc (NYSE:) jumped more than 6% in premarket trading Friday.
For the three months ended Aug. 2, the company adjusted per-share earnings of $1.89 on revenue of $25.00 billion, beating analyst estimates for $1.68 per share and $24.14B, respectively
Infrastructure Solutions Group (ISG), which include AI-optimized servers and networking hardware, reported record revenue of $11.6 billion, up 38% year over year, with record servers and networking revenue of $7.7 billion, up 80% from a year earlier.
“Our momentum in ISG is a significant tailwind,” the company said.
Dell also raised its earnings per share (EPS) guidance for the full fiscal 2025 to $7.55 – $8.05, up from $7.40-$7.90 previously.
Commenting on the report, Bernstein analysts noted Dell’s AI Server metrics were strong, but the segment’s profitability “remains challenged.”
They believe AI server gross margin improved “only marginally” during the quarter. Specifically, they estimate that AI server gross margins are between 8% and 14%, with operating profit margin around 5%.
Meanwhile, analysts at Goldman Sachs said Dell’s improving AI server margins “should support its valuation multiple and mid-term growth outlook, and we’re encouraged by early signs of a growth inflection in traditional servers and storage.”
“The PC demand recovery – like with HPQ – has been slower-than-expected, but should eventually emerge over the next 12-months.”
Yasin Ebrahim contributed to this report.
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