Dell Technologies beat analysts’ earnings expectations in its fourth-quarter results, driven by demand for AI optimization in its server business that sent the stock surging almost 25% Friday morning.
The company’s Infrastructure Solutions Group (ISG) reported fourth quarter revenue of $9.3 billion, up 10% sequentially, but down 6% percent year-over-year. A majority of the revenue was made up of servers and networking revenue, which was “driven primarily by AI-optimized servers.”
“Our strong AI-optimized server momentum continues, with orders increasing nearly 40% sequentially and backlog nearly doubling, exiting our fiscal year at $2.9 billion,” Jeff Clarke, Dell’s vice chairman and COO, said in the company’s earnings report.
Clarke said Dell is only at the start of its venture into AI, and believes it’s “uniquely positioned with our broad portfolio to help customers build GenAI solutions that meet performance, cost and security requirements.”
Dell said it is expanding its AI portfolio offerings to customers, including new enterprise data storage with Nvidia’s AI infrastructure, and “the broadest portfolio of commercial AI laptops and mobile workstations” with built-in AI abilities. Dell also said the company is expanding its Dell Generative AI Solutions portfolio to support more AI-powered servers.
Overall, Dell’s fourth quarter revenue was $22.3 billion, which was down 11% year-over-year. Dell’s revenue for the year was $88.4 billion, which was also down 14% compared to fiscal year 2023.
“We generated $8.7 billion in cash flow from operations this fiscal year, returning $7 billion to shareholders since Q1 FY23,” said Yvonne McGill, Dell’s CFO. “We’re optimistic about FY25 and are increasing our annual dividend by 20% — a testament to our confidence in the business and ability to generate strong cash flow.”