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Dell’s Financial Results Top Forecasts As Server Sales Rise 80%

Dell Technologies (DELL) has reported better-than-expected second-quarter financial results, driven by an 80% increase in sales of its servers that run artificial intelligence (A.I.) models.

The Texas-based company reported earnings per share (EPS) of $1.89 U.S., which beat the $1.71 U.S. that was expected on Wall Street.

Revenue during the quarter totaled $25.06 billion U.S., which topped consensus estimates that called for $24.53 billion U.S. from the company. Sales were up 9% from a year earlier.

Management, including founder Michael Dell, attributed the strong print to the company’s server business, which is seeing increased global demand amid the current A.I. boom.

Dell’s servers run microchips from companies such as Nvidia (NVDA) and Advanced Micro Devices (AMD) and demand is skyrocketing, particularly among cloud computing providers.

The Infrastructure Solutions Group (ISG), which makes servers for data centres, is now Dell’s fastest-growing unit, posting sales of $11.65 billion U.S. during Q2, up nearly 40% from a year ago.

Dell’s Servers and Networking group, which is part of ISG and includes both A.I.-oriented servers and more traditional servers for older applications, reported Q2 sales of $7.76 billion U.S., an 80% year-over-year increase.

Dell said $3.1 billion U.S. of the sales came from A.I. servers, up from $1.7 billion U.S. in the previous first quarter of this year.

Strengthening server sales offset weakness in Dell’s Client Solutions Group, which focuses on the company’s core business of making personal computers (PCs) and laptops.

The PC side of the business saw sales decline 4% on an annual basis to $12.41 billion U.S. during Q2.

Consumer sales fell 22% to $1.86 billion U.S. and the company’s sales of personal computers to businesses was flat at $10.55 billion U.S.

In terms of guidance, Dell lifted its full-year outlook, saying it now expects revenue of $95.50 billion U.S. to $98.50 billion U.S.

The new guidance is up from a previous estimate of $93.50 billion U.S. to $97.50 billion U.S. in full-year sales.

Dell’s stock was up 5% in premarket trading on news of its latest financial results. Over the past 12 months, the company’s share price has increased 99% to trade at $110.74 U.S.