By Connor Hart

Dell Technologies and HP are both waiting for consumers to upgrade their personal computers, which is dragging on their sales for the time being.

Shares of both tech companies slumped in late trading Tuesday after each issued downbeat outlooks. HP's stock price fell 8%, to $36, in after-hours trading, while Dell's tumbled 10%, to $127.11.

Executives at both companies cited the adoption of artificial-intelligence capabilities as a reason for hope, with sales likely picking up in the second half of 2025. HP said it expects AI to make up about a quarter of its PC-unit shipments for the year. Dell, meanwhile, is counting on AI-driven hardware enhancements such as extended battery life, among other reasons, to spur upgrades.

They are also counting on more customers to upgrade their devices with the end of support for PCs running Microsoft Windows 10 in October 2025.

That isn't enough to help current results.

HP forecast adjusted per-share earnings between 70 cents and 76 cents for its fiscal first quarter, missing the 85 cents a share that analysts are looking for, according to FactSet.

For the fiscal year, the Palo Alto, Calif., company guided for adjusted per-share earnings between $3.45 and $3.75, the midpoint of which is just below the $3.61 that analysts surveyed by FactSet are expecting.

Chief Financial Officer Karen Parkhill said that the market will be stronger in the second half of the year due to normal seasonality, the timing of the Windows 11 refresh and increased adoption of AI. Consumers are currently holding off on buying AI-enabled PCs, which are being adapted quicker in commercial markets, she added.

HP's outlook came amid mixed results in its recent fiscal quarter, which ended Oct. 31.

Earnings fell to $906 million, or 93 cents a share, from $974 million, or 97 cents a share, a year earlier. On an adjusted basis, earnings were also 93 cents, in line with expectations.

Revenue edged 1.7% higher, to $14.06 billion, just beating the $13.99 billion that analysts surveyed by FactSet were expecting. Sales of personal systems increased 2%, to $9.59 billion, while revenue from printing grew 1%, to $4.45 billion.

Dell said it expects revenue between $24 billion and $25 billion for the current quarter, below the $25.59 billion expected by analysts polled by FactSet. Its adjusted per-share earnings forecast between $2.40 and $2.60 also came below consensus views for $2.65.

Dell Operating Chief Jeff Clarke attributed the company's lower-than-expected outlooks in part to customers delaying the purchase of new hardware and software products.

The company's guidance came after the company posted a 10% jump in third-quarter revenue, boosted by surging sales of its servers and networking equipment, which was helped by adoption of AI.

Sales in its infrastructure-solutions group, which includes servers and networking, rose 34%. Its client-solutions-group revenue, meanwhile, fell 1%, dragged down by an 18% decrease in consumer sales.

Write to Connor Hart at connor.hart@wsj.com

(END) Dow Jones Newswires

November 26, 2024 18:47 ET (23:47 GMT)

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