Dell's AI business is booming, but shares plunged after it cut its revenue outlook

Core Insights - Dell reported third-quarter revenue of $24.4 billion, reflecting a 10% year-on-year increase, but fell short of analysts' expectations of $24.67 billion [2][3] - The Infrastructure Solutions Group (ISG) saw a significant revenue increase of 34% year-on-year, reaching a record-high of $11.4 billion, driven by strong demand for AI servers and related technologies [3][4] - Despite strong growth in the AI sector, Dell's shares dropped 12% in premarket trading due to a lower-than-expected fourth-quarter revenue outlook, projected between $24 billion and $25 billion, compared to analysts' forecast of $25.5 billion [4][5] Revenue Breakdown - ISG revenues reached $11.4 billion, with server and networking revenue increasing by 58% year-over-year to $7.4 billion [3] - Client Solutions Group (CSG) revenue declined by 1% year-over-year to $12.1 billion, with commercial client revenue growing by 3% but consumer revenue falling by 18% [6] AI Business Performance - Dell's AI operations are positioned as a key growth area, with AI server orders reaching $3.6 billion in Q3 and a pipeline growth of over 50% [4][7] - The company shipped $2.9 billion in AI servers during the quarter and has established partnerships, including one with Nvidia for an AI factory for Elon Musk's xAI [7]