Dell Shares Dip Despite Strong AI Server Growth

Dell reported first-quarter earnings that surpassed analysts' expectations for both earnings and sales, solidifying its position as a leading vendor for AI-oriented servers. Despite this, Dell shares fell by about 12% in extended trading before recovering. 

In February, Dell's earnings per share had significantly exceeded expectations, whereas this quarter’s earnings were aligned with Wall Street forecasts.

During the quarter, Dell achieved a net income of $955 million, or $1.32 per diluted share, compared to $578 million, or 79 cents, in the same period last year. Overall sales increased by 6% annually. Dell's Infrastructure Solutions Group, which includes data center sales, saw a 22% annual rise in sales to $9.2 billion. Notably, server sales surged by 42% to $5.5 billion, driven by strong demand for AI servers.

The company's Client Solutions Group, responsible for PCs and laptops, showed flat growth with annual sales remaining steady at $12.0 billion. Dell also highlighted $2.6 billion in "AI-optimized" server orders during the quarter, reflecting its strategic focus on AI infrastructure. Earlier in the year, Nvidia CEO Jensen Huang recognized Dell as a key figure in placing orders for Nvidia’s new chips.

Before Thursday’s earnings report, Dell shares had more than doubled in 2024, underscoring the market’s anticipation of the company's continued growth in the AI server sector. Despite the initial dip in share price, Dell's robust performance in AI servers underlines its growing influence in the AI technology infrastructure market.