Dell misses quarterly revenue estimates on slow PC market recovery

(Reuters) – Dell Technologies (NYSE:) on Thursday reported third-quarter revenue below estimates due to a slower-than-expected recovery in the hardware and software market, sending its shares down 4% after the bell.

Vendors in the market have seen a slowdown in demand following the surge in sales of electronic devices during COVID lockdowns on the back of increased work-from-home measures.

Research firm Gartner said last month that Dell posted a sixth consecutive decline in personal computer (PC) shipments from July to September due to weak spending by its key enterprise customer base, owing to a sluggish economy.

The company’s client solutions group, which includes its consumer and enterprise PC business, posted revenue of $12.28 billion for the third quarter, nearly an 11% fall compared to a year earlier.

Dell Chief Operating Officer Jeff Clarke said the company’s servers and networking business revenue was up 9% sequentially, fueled by customer interest in generative artificial intelligence.

However, server makers have been struggling with supply constraints for AI chips made by Nvidia (NASDAQ:), used to run large language models that power apps like ChatGPT.

The results mirror PC market trends as rival HP (NYSE:) forecast first-quarter profit below estimates on a slow PC market recovery and weak demand in China.

Revenue for the third quarter came in at $22.25 billion for Dell, missing estimates of $23 billion, according to LSEG data.

Positive results posted by major PC chipmakers like Intel (NASDAQ:) and AMD (NASDAQ:) signaled that recovery is gathering pace in the market ahead of the much awaited holiday season.

The PC market is expected to bank on demand from AI boost, according to research firm Canalys, as it projects adoption of AI-capable PCs to accelerate from 2025 onward, with such devices accounting for around 60% of all PCs shipped in 2027.