Dell’s revenue forecast signals AI boost will take longer to materialise
DELL Technologies on Thursday (Oct 5) reiterated that it expects revenue to grow at a compounded annual rate of 3 per cent to 4 per cent over the long term, disappointing some investors who expected AI to drive a bigger sales jump and sending its shares down 4 per cent.
The company, which makes PCs and servers that are used to support technology like ChatGPT, also forecast long-term adjusted earnings per share growth of 8 per cent or more and said it would buy back another US$5 billion in stock on top of a similarly sized repurchase plan launched in 2021.
The revenue outlook suggests that the boost from generative AI could take longer to materialise for the company whose shares have rallied nearly 20 per cent since a strong earnings report in August on optimism about its role in enabling the new technology.
“The unchanged revenue CAGR (forecast) seems conservative given the recent AI tailwinds, which are expected to not only build but persist in the future,” Evercore ISI analysts said.
Like other tech firms, AI demand has recently emerged as a bright spot for Dell after several quarters of sales declines due to lower digital spending. Its main revenue generator – the PC market – has been in a slump since the pandemic ended.
Dell said it expects to raise its quarterly dividend by 10 per cent or more annually through fiscal 2028, as part of a plan to return over 80 per cent its of adjusted free cash flow to shareholders through a combination of share repurchases and dividends.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
The figures were shared at the company’s meeting with Wall Street analysts on Thursday.
Slowing demand has pushed Dell to cut costs, including a layoff round that impacted 6,000 jobs earlier this year. It had also paused hiring and put limits on employee travel.
Dell’s shares have risen 65 per cent so far this year, after dropping nearly 30 per cent in 2022. REUTERS
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Telcos, Media & Tech
Apple set for big sales decline as investors await AI in iPhones
Microsoft, Brookfield to partner on renewable energy projects
AI fuels cloud computing boom for tech giants
AMD slides after AI chip forecast misses lofty estimates
Amazon’s Twitch starts rival to TikTok in short-form video
Pinterest revenue surges on popularity of shopping push