The world’s biggest computer equipment maker is a beneficiary of rising demand for AI servers, which help companies use artificial intelligence to automate tasks and boost productivity. That’s boosting Dell Technologies’ sales and profits, and the company forecasts annual revenue and profit above Wall Street estimates on Thursday. Its shares rose more than 16% in after-hours trading, one of the most significant gains in six months.
The quarter’s results were boosted by growth in the company’s Infrastructure Solutions group as customers buy more advanced servers to handle artificial intelligence workloads. That helped the unit’s revenues climb 10% from the previous quarter, though its overall revenue fell 6% year-over-year. The results were also buoyed by Dell’s new laptop sales designed to support AI computing tasks.
In the fourth quarter, Dell sold 60,000 laptops equipped with Nvidia’s newest graphics processing unit, the RTX 2080M, considered the best in the industry. Those GPUs are vital for handling AI computations requiring high-performance processors. The results underscored that the demand for Dell’s servers and the upcoming launch of its AI laptop are fueling the company’s growth, even as it grapples with a long-term decline in personal computer sales.
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Founded in 1984, Dell designs, develops, and sells information technology hardware, software, and services to consumers, small businesses, and large enterprises worldwide. Its products include personal computers, data storage devices, network switches, servers, software, and other related technology. The company’s stock has outperformed the S&P 500 this year as investors anticipate interest rate hikes will slow, and it is positioned to benefit from the ongoing shift towards cloud computing.
Dell’s earnings report follows robust reports from chip designer Nvidia and Nutanix on Wednesday. Other tech stocks were higher, including Salesforce and Okta, which both rose after topping quarterly estimates and raised full-year outlooks on solid demand.
Intel led the Dow as investors speculated that a stronger-than-expected jobs report would help spur the Federal Reserve to end its current interest rate-hike cycle. Walgreens gained 7% after the drugstore chain reported better-than-expected quarterly sales and profit.