FILE PHOTO: The logo for Dell Technologies Inc. is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 10, 2019. REUTERS/Brendan McDermid/File Photo
(Reuters) -Dell Technologies on Thursday reiterated that it expects revenue to grow at a compounded annual rate of 3% to 4% over the long term, disappointing some investors who expected AI to drive a bigger sales jump and sending its shares down 4%.
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% or more and said it would buy back another $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 materialize for the company whose shares have rallied nearly 20% 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% or more annually through fiscal 2028, as part of a plan to return over 80% its of adjusted free cash flow to shareholders through a combination of share repurchases and dividends.
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% so far this year, after dropping nearly 30% in 2022.
(Reporting by Yuvraj Malik in Bengaluru; Editing by Anil D'Silva and Shounak Dasgupta)
