Dell Technologies Inc reported revenue that declined more than expected, buffeted by continued sluggish corporate demand for personal computers.

Fiscal third-quarter sales fell 10% to US$22.3 billion , the company said Thursday in a statement. Analysts, on average, estimated US$23 billion. The client solutions group, which includes corporate and consumer PC sales, dropped 11%, far short of analysts’ expectations.

Revenue will be about US$22 billion in the period ending in January, chief financial officer Yvonne McGill said on a conference call after the results were released. Analysts, on average, projected US$23.9 billion. The PC unit will see sales decline in the “low single-digits sequentially,” McGill said, although “we’re seeing pockets of stability in CSG demand that have yet to see a broader recovery in the PC market.”

Known for its PC business, Dell has attracted investor interest this year due to a spike in demand for high-powered servers used to run artificial intelligence workloads. The Round Rock, Texas-based company said it recognised US$500 million in revenue from the sale of this equipment in the period that ended Nov 3. Earlier this month, Dell announced a US$150 million server deal with AI startup Imbue.

Server revenue was US$4.66 billion in the quarter, compared with analysts’ average estimate of US$4.43 billion, according to data compiled by Bloomberg. “Our servers and networking business was up 9% sequentially, fueled by customer interest in generative AI,” chief operating officer Jeff Clarke said in the statement.

That outperformance is in contrast with rival Hewlett Packard Enterprise Co, which reported a steeper drop in server sales than expected on Tuesday.

Dell shares fell about 3% in extended trading before recovering those losses during the company’s conference call. The stock closed at US$75.87 in New York after jumping 89% this year amid enthusiasm about the potential for AI to boost demand.

PC makers have been battered the past 18 months as demand cratered in a post-pandemic bust. Computer peer HP Inc last week reported similarly lukewarm results.

Still, analysts have begun to see signs of life for the industry. In an October report, IDC wrote that while the global economy remained subdued, the PC market had “moved past the bottom of the trough.”

Dell expects revenue growth in the new fiscal year beginning in February, Clarke said in the statement. Analysts currently project an annual sales increase of 3.5%.

“We expect revenue to return to growth next year, above our long-term financial framework,” McGill said on the call. “The opportunity is a broader IT spending recovery, with large corporate and enterprise customers, particularly in the US.”

  - Bloomberg