(Reuters) – Dell Technologies Inc (DELL) missed Wall Street expectations for third-quarter revenue on Tuesday, hurt by weak demand for traditional personal computers and intense competition from rival server makers.
The company’s shares fell more than 5% to $134 in extended trading.
Dell reported revenue of $24.37 billion in the quarter, compared with analysts’ average estimate of $24.67 billion, according to data compiled by LSEG.
Despite growing demand for Dell’s AI-optimized servers used to handle large AI workloads, the traditional PC segment faces intense competition from competitors like HP and weak consumer spending amid an uncertain economy.
Revenue from Dell’s Customer Solutions group, which includes its PC business, was $12.13 billion, below expectations of $12.43 billion.
“Interest in our portfolio is at an all-time high, driving $3.6 billion in demand for standard AI servers in the third quarter and pipeline growth of more than 50%,” Jeff Clark, Dell’s chief operating officer, said Tuesday. .
As Dell’s server revenue grows, investors are keenly eyeing the company’s costs after it indicated in May that higher expenses to build AI-driven servers and competitive pricing would hurt its margins.
The company is also betting on new AI-powered computers to boost its traditional computer business.
Revenue from Dell’s infrastructure solutions group, which includes AI servers, rose 34% to $11.37 billion, compared to estimates of $11.35 billion.
The company’s revenues from servers and networks jumped by 58% during the third quarter to reach $7.36 billion, but it was less than estimates of $7.64 billion.
(Reporting by Zaheer Kashwala in Bengaluru; Editing by Shaunak Dasgupta)
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