(Reuters) -Dell missed Wall Street expectations for third-quarter revenue on Tuesday, weighed down by weaker demand for its traditional PCs and stiff competition from rival server makers, sending its shares down more than 10% in extended trading.
The company reported revenue of $24.37 billion in the quarter, compared with the average analyst estimate of $24.67 billion, according to data compiled by LSEG.
Despite booming demand for Dell’s AI-optimized servers used to handle large AI workloads, its traditional PC segment has been facing stiff competition from rivals and weaker consumer spending amid an uncertain economy.
Revenue from Dell’s client solutions group, which houses its PC business, came in at $12.13 billion, below expectations of $12.43 billion.
Rival PC maker, HP also provided a weak first-quarter profit forecast, and electronics retailer Best Buy trimmed its annual forecasts as firms grapple with weaker consumer electronics demand.
“Interest in our portfolio is at an all-time high, driving record AI server orders demand of $3.6 billion in Q3 and a pipeline that grew more than 50%,” Dell’s Chief Operating Officer Jeff Clarke said on Tuesday.
As Dell’s server revenue grows, investors are keenly eyeing the company’s costs after it flagged in May that higher expenses to build AI-heavy servers and competitive pricing would hurt its margins.
The company is also betting on new AI PCs to boost its traditional computer business.
Revenue from Dell’s infrastructure solutions group, which includes its AI servers, rose 34% to $11.37 billion, compared with estimates of $11.35 billion.
The company’s servers and networking revenue for the third quarter jumped 58% to $7.36 billion, but missed estimates of $7.64 billion.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Shounak Dasgupta)
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