Dell Technologies Inc. missed revenue targets today as its server business struggled with higher costs and lower demand in a market left reeling by ongoing trade tensions between the United States and China.

The infrastructure technology giant reported a third-quarter profit before certain costs such as stock compensation of $1.75 per share on revenue of $22.8 billion, up 1% from a year ago.

The company topped Wall Street’s expected earnings of $1.62 per share but fell short of the $23.04 billion revenue forecast. As a result, Dell’s stock was down almost 4% in after-hours trading after falling more than 3% in the regular session.

The main culprit for the revenue miss was Dell’s server and networking business, which saw revenue fall 16.1% from the previous year to just $4.24 billion.

U.S. technology firms with a big exposure to Chinese markets are suffering the consequences of President Donald Trump’s 16-month trade war with China, which has rattled supply chains amid fears of an economic slowdown.

Dell is far from alone in the matter. Earlier this month, Cisco Systems Inc. provided a quarterly earnings and revenue forecast that came in below estimates, with the company citing trade uncertainties as the reason. And just yesterday, Hewlett Packard Enterprise Co. also missed revenue targets, once again pinning the blame on the trade tensions.

Dell itself had also warned of softness in the server market during its previous earnings report in August, saying that many of its customers have cut back on orders.

Pund-IT Inc. analyst Charles King said Dell was an interesting example of how investors are easily spooked by what is a systemic challenge that’s hurting companies across the tech infrastructure sector. He said businesses hate uncertainty and generally choose to “pull down the shades and settle in” rather than risk making investments in such situations.

“Dell’s explanation for the weakness in data center spending squares with what other vendors are saying,” King added. “Plus, the company’s exceeding expectations on earnings, as well as staying on track with its debt retirement strategy, highlights the quality of Dell’s management team.”

The poor performance in servers and networking overshadowed some good results elsewhere, most notably with Dell’s subsidiary VMware Inc. The company, which makes virtualization software that improves data center efficiency, saw its quarterly revenue rise almost 12%, to $2.46 billion, beating Wall Street’s target of $2.41 billion.

VMware also confirmed it has finalized its acquisitions of Massachusetts-based cybersecurity firm Carbon Black Inc. and California-based Pivotal Software Inc. Those deals are estimated to have a combined price of $4.8 billion.

Dell Chief Financial Officer Tom Sweet also highlighted the company’s performance in cloud data storage, which drove a 9% rise in its overall storage revenue during the quarter.

“We remain focused on long-term profitable growth, growing faster than competitors and the industry, growing operating income and EPS faster than revenue and generating strong cash flow over time,” Sweet said in a statement.

Dell’s Client Solutions Group, which includes sales of PCs, notebooks and tablets, also performed well with revenue rising 4.6% to $11.41 billion.

King told SiliconANGLE the strong performance of Dell’s client PC group was critical for the company.

“Without it, we’d probably be looking at a substantially different situation and investor response,” King said. “That balancing effect speaks to the underlying value of Dell’s focus on end-to-end IT solutions. It calls into question the decisions of HPE and some other competitors to abandon or formally separate PC development from their data center businesses.”

King’s sentiments were shared by Moor Insights & Strategy analyst Patrick Moorhead, who told SiliconANGLE that the PC division continues to be one of the company’s main revenue drivers.

“PCs led the charge with 9% growth driven by what I believe were strong Windows 7 to Windows 10 upgrades,” Moorhead said.

The analyst added that he believes VMware remains critical for Dell’s future growth prospects. He said VMware has helped Dell to become an industry leader in hybrid cloud computing, which refers to a strategy where enterprises run workloads in a mix of private and public clouds.

“For the future, I see VMware as the growth and profit driver for Dell Technologies,” Moorhead continued. “VMware enables growth in solutions like Unified Workspace and the Dell Technologies Cloud. Not only are these solutions, and hence higher-margin, they are where the growth will come from.”

Dell also updated its full-year guidance, saying it expects revenue of between $91.5 billion and $92.2 billion, below Wall Street’s forecast of $93.54 billion.

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