The stock of Dell Technologies (DELL) is down 12% after the maker of personal computers and high-efficiency servers issued forward guidance that disappointed analysts and investors.
The weak guidance comes despite overall positive financial results for this year’s third quarter that showed accelerating sales related to artificial intelligence (A.I.).
The Texas-based company reported third-quarter earnings per share (EPS) of $2.15 U.S., which was ahead of the consensus forecast that called for $2.06 U.S.
Revenue in the quarter totaled $24.40 billion U.S., which was slightly below Wall Street forecasts of $24.67 billion U.S. Sales were up 10% from a year earlier.
Sales of Dell’s A.I. servers that run the microchips and processors made by Nvidia (NVDA) and other chipmakers rose 34% to $11.40 billion U.S. during Q3.
Dell said it shipped $2.9 billion U.S. of A.I. servers during the quarter and booked $3.6 billion U.S. of future A.I. server orders.
The company’s computer storage systems grew less strongly than sales of its servers, rising 4% to $4 billion U.S.
However, sales of Dell’s personal computers and laptops to consumers and businesses declined 1% to $12.1 billion U.S. during Q3.
While commercial clients buying computers for their workforces rose 3% to $10.10 billion U.S., the company’s sales of personal computers to consumers fell 18% to $2 billion U.S.
Looking ahead, Dell said it expects $24 billion U.S. to $25 billion U.S. in revenue during the current fourth quarter. That guidance is less than the $25.57 billion U.S. expected by analysts.
Dell also said it expects $2.50 U.S. in earnings per share this quarter, which is less than Wall Street expectations of $2.65 U.S. a share.
Dell executives said some of the demand from its customers was shifting to later quarters as they wait to buy Nvidia’s next-generation Blackwell A.I. microchips.
They also said much of the company’s A.I. system growth was already reflected in its future orders.
Prior to today (Nov. 27), the stock of Dell Technologies had risen 90% this year to trade at $141.74 U.S. per share.
