Dell and HP Sales Miss Analyst Targets As the PC Market Slows Down

Stocks for leading computer manufacturers, HP and Dell have dipped after their third quarter earnings reports showed declining revenue. Yahoo Finance reported that Dell and HP sales revenue drop points to a stagnating personal computer market.

Dell’s PC Sales Decline

Dell reported a quarterly sales decline for its personal computer unit. According to its Q3 financial report, revenues from this business dropped by 1% to stand at $12.1 billion, which is lower than the projected estimates. During the earnings call with analysts, Dell CFO, Yvonne McGill acknowledged that the slow personal computer market could continue till next year.

“The PC refresh cycle is pushing into next year,” she said.

HP’s personal computer unit reported a 2% increase in sales revenue to hit the $9.59 billion mark. Even so, this amount is still below analyst’s estimates. HP CEO argued that Microsoft’s new Windows edition has not encouraged corporate customers to buy new PCs fast the way previous releases did.

Historic Market Decline

The PC market has experienced a gradual decline in recent years. Demand for new laptops hit the peak in the early months of the Covid-19 pandemic. At the time, demand was driven by the fact that corporate employees and students were stuck in their homes.

There have been signs of market recovery this year. However, industry analysts from IDC say that shipment of personal computers dropped in quarter three of this year. Dell and HP revenues were expected to pick up following the introduction of new machines that had been touted as better for AI workloads. Analysts say that the new products were yet to spur demand as expected.

“Buyers have yet to see clear benefits or business value,” Gartner Analyst, Mikako Kitagawa said last month.

Stock Performance

Dell stocks dropped by 13% in premarket trading on November 27, 2024. Since the beginning of the year, the stocks had gained 85%. HP shares also dipped by about 10%. The stocks had increased by 30% since the beginning of this year.

Dell quarterly earnings showed that sales from its infrastructure unit, which manufactures servers, increased by 34% to reach $11.4 billion in the quarter ending November 1 2024. This was slightly more than the $11.3 billion that analysts predicted. Overall, The company’s total revenue rose by 10% in the quarter under review to reach a high of $24.4 billion. This is slightly lower than the $24.6 billion projected by analysts.

Dell is a market leader in manufacturing computers for corporations. The Texas-based company has enjoyed renewed investor interest after it developed high-powered servers to support AI workloads.

The company maintained conservative projections for the quarter ending February 2025. The company estimated total revenues for the quarter to be about $24.5 billion. HP’s revenue estimates did not impress investors. The Palo Alto-based company projected earnings of between 70 cents and 76 cents per share for the quarter ending January 2024.

Leveraging the AI Boom

Earlier this month, the PC maker announced that it was shipping servers that run on Nvidia’s Blackwell AI chips to leading cloud infrastructure provider, CoreWeave. Dell reported that it had shipped AI-optimized servers worth $2.9 billion in Q3. This was a drop from the $3.1 billion the company had generated in Q2.

“AI is a robust opportunity for us with no signs of slowing down,” Jeff Clerke, Dell’s COO said in the statement.

Clerke said that AI server orders in Q3 had hit the $3.6 billion mark and that the company had noted growing demand for the servers across all customer types.