$Dell Technologies Inc.(DELL)$ fell about 18% in extended trading after its first revenue increase since 2022 wasn’t enough to impress investors with high expectations for the company’s AI server business.
Dell’s primary PC competitor, $HP Inc(HPQ)$ ., reported signs of a recovering computer market Wednesday, sending its shares up 17% on Thursday.
DELL earnings were really good but its was completely priced in it looks like.
Earnings Summary:
Adjusted Profit: Dell expects adjusted profit to be about $7.65 a share, slightly below the $7.70 average estimate.
Revenue Outlook: The company raised its revenue outlook for the fiscal year ending in February 2025 ( a range of $93.5 billion to $97.5 billion), ,projecting an 8% increase at the mid-point, which exceeds analysts' average estimate of a 7% gain.
AI Server Revenue: Dell Technologies Inc. reported a significant Increase in revenue fromits AI servers,more than doubling to $1.7 billion from the previous quarter, according to COO Jeff Clarke.
Backlog Growth: The backlog for AI servers also saw substantial growth, increasing by over 30% to $3.8 billion.
PC Business: Sales of business PCs increased 3% to $10.2 billion, surprising analysts who expected a 2% drop.
Infrastructure unit: which includes servers and networking and storage equipment, jumped 22% to $9.2 billion.
Market Reaction:
Despite these gains, Dell's stock fell by 18% in extended trading, as the results did not meet investors' high expectations for the company's AI server business.
Analysis:
Dell's AI server business is experiencing strong demand, but the market's reaction indicates that the company's performance was not enough to exceed high investor expectations.
The company's overall performance, including in its PC segment, shows resilience despite a historic decline in the PC market over the past two years.
The increase in shipments and the potential for growth with new software and hardware capable of handling AI tools suggests a possible upswing in the market.
Dell’s primary PC competitor, HP Inc., reported signs of a recovering computer market Wednesday, sending its shares up 17% on Thursday. Like Dell, HP reported a bump in sales among its business customers rather than consumers.
Conclusion:
“Results weren’t bad, but expectations were very high, and the numbers weren’t strong enough to spur further near-term upside,” wrote analysts at Vital Knowledge.
Dell’s stock has more than tripled over the past 12 months as investors have viewed the hardware maker as a beneficiary of demand for artificial intelligence.
While Dell's AI server business is performing well, the stock market's response reflects the high bar set by investors.
The company's outlook remains positive, with expectations of continued momentum from AI demand throughout the year.
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Comments
Buy the dip!!!