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Dell earnings show shipments of AI servers more than doubled sequentially

Dell Technologies Inc. blazed past expectations for its latest quarter as it continued to benefit from explosive artificial-intelligence demand, but the stock extended its pullback from record highs.

The company racked up record revenue in its servers and networking business during the fiscal first quarter, while AI-optimized server orders came in at $2.6 billion. Shipments of AI servers more than doubled sequentially to $1.7 billion, and Dell’s backlog for the category increased more than 30% to $3.8 billion.

Shares (DELL) dropped 13.1% in Thursday’s after-hours session despite upbeat guidance for the fiscal second quarter as well. The stock had dropped 5.2% during the regular session, to snap a six-day win streak to a record close of $179.21 on Wednesday. It’s up 122% so far this year and ahead 259% over a 12-month span.

“No company is better positioned than Dell to bring AI to the enterprise,” Jeff Clarke, the company’s vice chairman, said in a release.

The company issued a full-year forecast on its earnings call, projecting $93.5 billion to $97.5 billion in revenue. That compares with the $94.6 billion FactSet consensus.

“We expect the AI momentum we’ve seen over the past three quarters to continue, driving incremental revenue for the year,” Chief Financial Officer Yvonne McGill said on the earnings call.

For the second quarter, Dell expects revenue of $23.5 billion to $24.5 billion, while analysts were modeling $23.3 billion.

Overall revenue for the latest quarter amounted to $22.2 billion, up 6% from a year before, whereas analysts tracked by FactSet were modeling $21.7 billion.

Dell’s record $5.5 billion in servers and networking sales highlighted a big quarter of growth for the infrastructure solutions business. Servers and networking revenue increased 42%, while overall segment revenue rose to $9.2 billion, up 22%. That cleared Wall Street’s bar of $9.0 billion.

The client solutions group, which includes personal computers and displays, saw flat revenue of $12.0 billion, but that came in ahead of the $11.7 billion analysts had been modeling. Commercial client revenue rose 3% to $10.2 billion and exceeded the $9.7 billion consensus on the metric.

Dell has greater exposure to the commercial PC market than peers, which benefits average selling prices.

Overall net income increased 65% to $955 million, or $1.32 a share. On an adjusted basis, Dell posted $1.27 in earnings per share, matching what analysts were expecting. Morningstar

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