Why Did Dell Plunge Despite Strong AI Growth?

xc_hehe
11-28 18:26

$Dell Technologies Inc.(DELL)$ Dell Technologies' stock fell sharply following its Q3 FY2025 earnings report, dropping 12% in after-hours trading despite notable AI service growth. Let's dive into the numbers and factors driving this reaction.

Financial Highlights vs. Market Expectations

  • Revenue: $24.37B (+10.1% YoY), missed the expected $24.52B.

  • Operating Profit: $2.2B (+2% YoY), beating the $2.16B consensus.

  • EPS: $2.07 (+9% YoY), surpassing expectations.

Business Segment Performance

  1. Infrastructure Solutions Group (ISG):

    Revenue surged 34% YoY to $11.37B, driven by strong storage and networking demand.AI servers delivered $2.9B in revenue, exceeding the $2.8B forecast.

  2. Customer Solutions Group (CSG):

    Consumer PC sales fell 2% YoY, dragging total segment revenue to $12.1B (-1%).Commercial PCs remained flat, highlighting market recovery challenges.

Earnings Guidance & Market Reaction

  • Q4 Revenue Outlook: $24B–$25B, missing market expectations of $25.57B.

  • EPS Guidance: $2.50, below the $2.65 forecast.

Why Did Dell Miss Expectations?

  1. PC Market Weakness: Seasonal trends and a sluggish PC market recovery hurt consumer sales.

  2. Heightened Competition: Intense competition in the IT sector limited growth despite solid storage demand.

  3. Investor Expectations: Optimism around Dell’s AI potential wasn’t enough to offset broader concerns.

Investment Outlook

  1. Infrastructure Growth: Demand for storage and networking products will likely remain a key revenue driver, with Dell continuing to invest heavily in this space.

  2. AI Development: Although AI server sales didn’t fully meet expectations, Dell’s long-term potential in AI remains promising as it increases R&D investment and strengthens partnerships.

  3. PC Market Realignment: Dell is revamping its product portfolio to boost consumer demand, positioning itself for potential market recovery.

Conclusion

While Dell’s AI segment shows robust growth, its overall performance hinges on overcoming PC market challenges and sustaining competitive advantages in infrastructure. The current dip may present a buying opportunity for long-term investors, but caution is warranted given ongoing market headwinds.

Do you see Dell as a long-term AI leader or a short-term risk?

# DELL Fell After Earnings: Would You Buy the Dip?

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Comment（6）

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  • Twelve_E
    ·11-29 11:45
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    $Dell Technologies Inc.(DELL)$ : Citi Lowers Price Target to $156 Amid Earnings Miss, Highlights AI and PC Recovery Potential.

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    • xc_hehe: 
      Interesting update! Despite the earnings miss, it's encouraging to see Citi still highlighting AI and PC recovery as key growth drivers for Dell. Do you think the market will focus more on Dell’s short-term challenges or its long-term AI and recovery potential?
      11-29 12:19
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  • NoraPoe
    ·11-28 21:37
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    The dip could be a great opportunity to accumulate shares before recovery.
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    • xc_hehe: 
      Buying the dip can be tempting, especially with Dell's long-term AI and PC recovery potential. However, it's important to assess whether the recent earnings miss signals deeper issues or just a temporary setback. Are you leaning towards a cautious accumulation strategy or a more aggressive approach?
      11-29 12:20
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  • Spring Cowper
    ·11-29 11:24
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    absolutely a long-term leader, together with HPQ

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    • xc_hehe: 
      Agreed! Dell and HPQ have proven their resilience in the tech industry. With both companies exploring AI and cloud solutions, they could be well-positioned for long-term growth. Are there specific trends or innovations from either company that you're particularly excited about?
      11-29 12:20
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