You’re not buying a Dell. So what’s behind the surge in its stock price?

Selling PCs isn’t currently favorable, as Dell has been contending with declining demand for several years. However, despite this, its stock saw a 20% increase in after-hours trading after exciting investors with talk of artificial intelligence (AI), a favorite buzzword in the tech industry.

Dell’s revenue decreased by 11% in the fourth quarter, though it performed better than expected. The PC business of the Texas-based company is trailing, but it highlighted a surge in demand for powerful servers to handle AI workloads in the last three months. Its infrastructure unit generated $9.3 billion in revenue, with a 10% growth from the previous quarter, primarily fueled by AI-optimized servers, although it’s down 6% year-over-year.

Shares of Dell Technologies soared nearly 20% in after-hours trading, following a record high close in Thursday’s trading session. Jeff Clarke, the company’s chief operating officer, expressed confidence in Dell’s position to capitalize on AI opportunities with its broad portfolio.

Nvidia, a leader in AI chips, has surpassed giants like Amazon to become one of the world’s most valuable companies. However, the demand for hardware to support AI exceeds Nvidia’s production capacity, presenting an opportunity for companies like Dell to step in.

Despite challenges, particularly amid the Covid-era PC boom, Dell stands to benefit from the growing significance of PCs in AI-related tasks, according to Clarke. In 2023, PC shipments experienced the worst decline in history, dropping by 14.8%, with Dell’s performance declining by almost 20%.

However, there was a slight increase in PC shipments in the fourth quarter of 2022, marking the first growth after eight consecutive quarters of decline. Clarke emphasized the increasing importance of PCs for AI-related work in his prepared remarks for Dell’s earnings call on Thursday.

Dell reported a 12% decrease in computer revenue, amounting to $11.7 billion, primarily driven by a decline in units sold, according to the company’s earnings release on Thursday.