(Reuters) – Dell Technologies (DELL) missed Wall Street expectations for third-quarter revenue on Tuesday, pressured by weaker demand for its traditional PCs and fierce 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 to the average analyst 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 stiff competition from rivals like HP and weaker consumer spending in 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.
“Interest in our portfolio is at an all-time high, driving record demand for AI server orders of $3.6 billion in the third quarter and a pipeline that has grown by more than 50%,” Dell’s Chief Operating Officer Jeff Clarke said Tuesday .
As Dell’s server revenue grows, investors are keeping a close eye on the company’s costs after the company signaled in May that higher costs to build AI-heavy servers and competitive pricing would hurt margins.
The company is also betting on new AI PCs to boost its traditional computing business.
Revenue at Dell’s infrastructure solutions group, which includes AI servers, rose 34% to $11.37 billion, compared with estimates of $11.35 billion.
The company’s server and networking revenue rose 58% to $7.36 billion in the third quarter, but missed estimates of $7.64 billion.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Shounak Dasgupta)
