Dell's Q3 Earnings: AI Server Boom Amid PC Slump Raises Questions About Tech Sector's Future

Tech Down on HP, Dell Outlook -- Tech Roundup

Shares of technology companies fell as disappointing earnings from two major companies weighed on the richly valued sector. Dell Technologies closed 12% lower after the computer-services giant's forecast for artificial-intelligence driven growth lagged some investors' expectations. HP shares tumbled 11% after the personal-computer maker projected profit shy of Wall Street targets. SoftBank Group is doubling down on its investment in OpenAI, taking a bigger bet on the potential of artificial intelligence as the technology improves and gains momentum. Canadian e-commerce company Shopify, which grew up helping small businesses set up online shops, is courting bigger clients to prolong its blockbuster expansion.

HP, Dell's weak forecasts spark share selloff

STORY: Shares of Dell and HP each sank about 13% on Wednesday after both companies issued downbeat outlooks that cast doubt on an AI-driven market recovery for PCs. Consumers have been slow to upgrade their personal computers as some wait for those with artificial intelligence capabilities. But one analyst told Reuters the forecasts suggested AI-powered computers may not (quote) "lead to any structural change in demand for PCs." Dell and HP said a slower-than-expected software upgrade from Microsoft's Windows 10 to Windows 11 likely prevented some consumers from trading up their PCs. Meanwhile, some analysts are concerned that a delayed rollout of Nvidia's latest AI chip, due to a design flaw, could squeeze sales and profit at Dell. But there was one bright spot for Dell on the AI front. Revenue from its AI server business jumped 58% thanks to robust demand from cloud companies.

Dell Shares Dive 10% After Earnings Reveal Sales Miss, AI Momentum Fails To Offset PC Slump

Shares in Dell Technologies plummeted 10% on Tuesday after its third-quarter revenue and earnings failed to beat initial expectations. The world's third-largest PC maker failed to beat estimates on hardware sales despite a healthy boost in its AI-related server business. The PC maker's net income totaled $1.13 billion, up from $1 billion year-on-year. Dell's Client Solution Group, the part of its business that sells PCs and laptops, saw revenue fall by 1% to $12.13 billion, failing to beat estimates of $12.43 billion. Sales of PCs to consumers fell 18% across the year to $2 billion, while commercial client revenue rose 3% to $10.1 billion. Revenue from Dell's computer storage systems totaled $4 billion, up from $3.8 billion last year, representing a 4% increase. The continued slowdown in consumer PC sales reflects broader challenges for Dell and its rivals. After a widespread decline following a flurry of new laptop sales during the pandemic, signs of a resurgence began to appear earlier this year. "The PC refresh cycle is pushing into next year," Dell chief financial officer Yvonne McGill said Tuesday on a call with analysts after the results. AI Server Demand Dell's success came from its AI server and storage sales under its Infrastructure Solutions Group. The company's revenue increased 34% to $11.4 billion, with servers and networking revenue of $7.4 billion, up 58%. Dell is a leading supplier of computer clusters that deploy AI, including computers based on Nvidia's leading chips. The company competes closely with other AI server makers such as Hewlett Packard Enterprise and Super Micro Computer in this area. Demand for Nvidia's AI chips continues to surge, driven by the increasing adoption of AI across industries. Dell is capitalizing on this trend by integrating Nvidia's cutting-edge technology into its systems and offering solutions tailored for AI workloads.

Dell shares fall on light revenue despite growing AI sales

Michael Dell, chairman and chief executive officer of Dell Inc., speaks during the Dell Technologies World conference in Las Vegas, Nevada, US, on Monday, May 20, 2024. Dell Technologies reported quarterly earnings on Tuesday that beat analyst expectations for earnings per share but came up light on overall revenue. Shares fell 6% in after-hours trading. Here's how Dell did for the fiscal third quarter versus LSEG consensus estimates for the quarter ending Nov. 1: Net income climbed 12% to $1.12 billion, or $1.58 per share, from about $1 billion, or $1.36 per share, in the year-ago period. Overall revenue increased about 10% from $22.25 billion a year ago. Dell will give a forecast for how it sees the current quarter shaping up on the call. Dell shares have risen 86% so far in 2024 as investors realize it's one of the most important companies selling tools and systems for artificial intelligence developers. Dell is a top vendor for computer clusters required to develop and deploy artificial intelligence, especially computers based around Nvidia chips. It competes against other server makers such as Supermicro and HPE, as well as manufacturers in Asia. Demand for Nvidia's AI accelerators remains high from cloud providers, enterprises, and government institutions, who often buy systems installed with tens of thousands of AI chips. Dell sells the completed systems. This year, Nvidia CEO Jensen Huang hailed Dell and its founder Michael Dell as the company to contact to place orders for its new Blackwell AI chips. "AI is a robust opportunity for us with no signs of slowing down," said Dell chief operating officer Jeff Clarke in a statement. Dell's AI server sales are reported in the company's Infrastructure Solutions Group (ISG), which includes AI servers, storage, networking components, and traditional servers. The group's revenue rose 34%, mostly driven by AI sales, to $11.4 billion. The strongest part of Dell's ISG business was its Servers and Networking subsidiary, which includes AI systems. Revenue rose 58% to $7.4 billion. Dell shipped $2.9 billion in AI servers during the quarter, and the company said during the quarter that customers had booked $3.6 billion dollars of future AI server orders. The company said increased AI server orders boosted demand by "double digits" for its traditional servers, which are less power-hungry and based around CPU chips from Intel or AMD, and can free up room or power inside data centers for companies investing heavily into AI infrastructure. The company's computer storage systems grew less strongly than servers, rising 4% to $4 billion. The overall ISG unit is more profitable, thanks to sales of pricier AI systems. Dell's Client Solutions Group, which sells PCs and laptops to consumers and enterprises, declined 1% on an annual basis to $12.1 billion. While commercial clients buying PCs for their workforce rose 3% on an annual basis to $10.1 billion, the company's sales from PCs to consumers fell 18% on an annual basis to $2 billion.

Dell's third-quarter revenue misses on PC weakness

Nov 26 (Reuters) - Dell Technologies (DELL.N), opens new tab missed Wall Street expectations for third-quarter revenue on Tuesday, weighed down by weaker demand for its traditional PCs and stiff competition from rival server makers. The company's shares fell more than 5% to $134 in extended trading. Dell reported revenue of $24.37 billion in the quarter, compared with the average analyst estimate of $24.67 billion, according to data compiled by LSEG. Despite booming demand for Dell's AI-optimized servers used to handle large AI workloads, its traditional PC segment has been facing stiff competition from rivals such as HP and weaker consumer spending amid an uncertain economy. Revenue from Dell's client solutions group, which houses its PC business, came in at $12.13 billion, below expectations of $12.43 billion. "Interest in our portfolio is at an all-time high, driving record AI server orders demand of $3.6 billion in Q3 and a pipeline that grew more than 50%," Dell's Chief Operating Officer Jeff Clarke said on Tuesday. As Dell's server revenue grows, investors are keenly eyeing the company's costs after it flagged in May that higher expenses to build AI-heavy servers and competitive pricing would hurt its margins. The company is also betting on new AI PCs to boost its traditional computer business. Revenue from Dell's infrastructure solutions group, which includes its AI servers, rose 34% to $11.37 billion, compared with estimates of $11.35 billion. The company's servers and networking revenue for the third quarter jumped 58% to $7.36 billion, but missed estimates of $7.64 billion. Reporting by Zaheer Kachwala in Bengaluru; Editing by Shounak Dasgupta Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial IntelligenceArtificial Intelligence

Why Dell Technologies Stock Crashed 11% Today | The Motley Fool

Heading into the report, analysts forecast Dell would earn $2.06 per share in Q3. Dell beat that number, reporting pro forma profits of $2.15. However, the company's quarterly revenue fell short of expectations at $24.4 billion, versus Wall Street's expected $24.7 billion. Sales still grew 10% year over year, however, led by the company's infrastructure solutions group (server farms), which showed tremendous 34% sales growth. Client solutions, however (PCs and similar devices), suffered a 1% decline in sales. Earnings growth was even better. Non-GAAP (generally accepted accounting principles) adjusted profits grew 14%, and GAAP profits grew 16%, but the GAAP number remains far smaller -- only $1.58 per share -- a 27% difference, suggesting Dell's not really as profitable as the "earnings beat" makes it look. As demonstrated by the divergence in growth rates between servers and PCs, Dell's placing a big bet on the continued popularity of artificial intelligence (AI) functions to drive its growth. COO Jeff Clarke said in the earnings release, "AI is a robust opportunity for us, with no signs of slowing down." And "interest in our [AI products] is at an all-time high, driving record AI server orders demand of $3.6 billion in Q3 and a pipeline that grew more than 50%, with growth across all customer types." So why aren't investors impressed? The fact that sales came in just a bit lighter than expected is probably one reason. Valuation may be another.

Dell's stock falls on weak guidance, as more customers hold off for next-gen AI servers - SiliconANGLE

Dell's stock falls on weak guidance, as more customers hold off for next-gen AI servers Weak guidance sent Dell Technologies Inc.'s shares into a tailspin today, with the stock down more than 10% in extended trading. The company is forecasting lower server sales, and blamed the shortfall on enterprise customers who are waiting to snap up new systems powered by Nvidia Corp.'s next-generation Blackwell chips and therefore shifting to later orders, some of which won't be reflected in the current quarter. The personal computer and server giant reported third quarter earnings that beat analysts' expectations, but its revenue for the period came up light. The company said it delivered earnings before certain costs such as stock compensation of $2.15 per share, easily surpassing the $2.06 analyst forecast, but its revenue of $24.4 billion, up 10% from a year earlier, came in below the Street's target of $24.67 billion. Net income for the quarter rose 12% to $1.12 billion, up from just over $1 billion in the year-ago period. Dell's vice chairman and chief operating officer Jeff Clarke (pictured) told analysts on a conference call that growth of artificial intelligence server sales is likely to swing quite wildly from quarter to quarter due to the pace of innovation in that industry. "This business will not be linear, especially as customers navigate the underlying silicon roadmap that is changing," he told analysts. Dell has become one of the biggest beneficiaries of AI-related chip sales, selling server systems packed with graphics processing units from Nvidia and other chipmakers. It competes with other server makers, such as Hewlett-Packard Enterprise Co. and Super Micro Computer Inc., as well as Asian firms like Lenovo Group Ltd., which all sell similar systems. However, Dell has been somewhat favored by Nvidia's chief executive Jensen Huang, who called out Dell's founder, Michael Dell, as the man to talk to for anyone interested in buying systems loaded with its upcoming Blackwell GPUs, or its older processors. The company has looked to build on its special relationship with Nvidia through its AI Factory initiative, which can help organizations to adopt and scale up AI across their operations by deploying an integrated set of infrastructure, software and services for running large language models. Adam Glick, senior director of AI portfolio marketing at Dell, discussed that initiative in detail during an interview on theCUBE, SiliconANGLE Media's livestreaming studio, earlier this month, explaining that it's all about helping organizations to build something that's "massively scaleable". Demand for Nvidia's GPUs remains sky high, with cloud infrastructure providers and enterprises like Meta Platforms Inc. still racing to buy up as many as they can get their hands on. They often buy complete systems with tens of thousands of GPUs, and Dell sells servers with numerous different configurations for customers to choose from. That explains why Dell's stock had soared more than 86% prior to today, as investors took note of its growing importance in the AI industry. However, those customers are now beginning to slow down their pace of new server purchases, in anticipation of Nvidia's next-generation Blackwell chips, which won't go on sale until early next year. They were originally slated to roll out in the third quarter, only to be delayed by a design fault. Clarke told analysts that the company was seeing some of its AI server demand shift to Blackwell, but Nvidia has yet to start shipping them to end-customers in large quantities. "We saw in the third quarter a pretty rapid shift of the orders towards our Blackwell designs," he said, pointing to a pipeline of future AI server orders that now stands at $4.5 billion. "We're only in the very early innings of enterprises learning how to deploy AI," he added. Dell's long-term prospects therefore look strong, but in the short term investors may have to endure some pain. For the current quarter, Dell is looking for revenue of between $24 billion and $25 billion, below the Street's target of $25.57 billion. The shortfall will impact the company's profitability too. In terms of earnings, Dell said it's looking at $2.50 per share at the midpoint of its guidance range, below the Street's consensus estimate of $2.65 per share. Dell reports AI server sales within its Infrastructure Solutions Group, which also includes sales of traditional servers, storage and networking systems, and revenue there jumped 34% to $11.45 billion in the third quarter. Within that segment, servers and networking delivered $7.4 billion in sales, up 58% from a year ago, with AI servers accounting for $2.9 billion. The company also saw increased demand for its traditional servers, which are powered by central processing units from companies like Intel Corp. and Advanced Micro Devices Inc. Sales of those systems increased by double-digits, the company noted. Storage systems generated another $4 billion in sales, up 4% from the same period last year. Dell's other main business segment is the Client Solutions Group, which accounts for sales of PCs and laptops. For now, it remains the company's biggest business, even though sales declined 1% from a year earlier to $12.1 billion. Dell said sales of commercial PCs, or those bought by companies for their employees, rose 3% to $10.1 billion, while consumer PC sales declined 18% to just $2 billion.

Disappointing Dell results demonstrate 'lumpiness' in AI rollout: analyst

A senior data infrastructure analyst says investors shouldn't expect linear quarterly growth related to the adoption of artificial intelligence (AI) technology by companies such as Dell Technologies Inc., as we're in the early stages of a yearslong AI rollout. Simon Leopold, managing director at Raymond James, told BNN Bloomberg that despite a sharp selloff of Dell stock following disappointing third-quarter earnings on Tuesday, he remains bullish on the company over the long term. "What I think is really being overlooked here is in this AI cycle, it's not going to be that every quarter will be up and to the right, there's lumpiness," he said in a Wednesday interview. Dell said on Tuesday that its total revenue for the third quarter increased 10 per cent to US$24.4 billion, below the average estimate of $24.6 billion by Bloomberg-tracked analysts. The company said it shipped $2.9 billion in AI-optimized servers, down from the previous quarter. Meanwhile, the company's cornerstone personal computer (PC) business declined by one per cent to $12.1 billion in the quarter, also falling short of estimates. Dell shares were down more than 12 per cent in midday trading in New York on Wednesday. Leopold noted that the company also lowered its outlook for the fourth quarter, which he said was just one of "several factors that surprised the market" to the downside, leading to Wednesday's selloff. However, the weakness in consumer demand for PCs may soon turn a corner, Leopold argued. "Consider the fact that roughly four years ago, we had the pandemic, and the PC market spiked massively. Subsequently, the market declined which is normal following that massive spike," he said. "But those PCs are now four years old and so typically we see PCs getting replaced after about four years." On the AI side, Leopold said he expects things to "ramp (up) nicely" in the back half of next year as chipmaking giant Nvidia produces its next generation of products. Last month, Dell announced plans to start shipping servers with Nvidia's new Blackwell semiconductors. "We continue to remain very hopeful about the next fiscal year and as a matter of fact, our fiscal 2026 earnings estimates did not change with (Tuesday's) revision," Leopold said.

Dell's third-quarter revenue misses on PC weakness

(Reuters) - Dell Technologies missed Wall Street expectations for third-quarter revenue on Tuesday, weighed down by weaker demand for its traditional PCs and stiff competition from rival server makers. The company reported revenue of $24.37 billion in the quarter, compared with the average analyst estimate of $24.67 billion, according to data compiled by LSEG. Despite booming demand for Dell's AI-optimized servers used to handle large AI workloads, its traditional PC segment has been facing stiff competition from rivals such as HP and weaker consumer spending amid an uncertain economy. Revenue from Dell's client solutions group, which houses its PC business, came in at $12.13 billion, below expectations of $12.43 billion. "Interest in our portfolio is at an all-time high, driving record AI server orders demand of $3.6 billion in Q3 and a pipeline that grew more than 50%," Dell's Chief Operating Officer Jeff Clarke said on Tuesday. As Dell's server revenue grows, investors are keenly eyeing the company's costs after it flagged in May that higher expenses to build AI-heavy servers and competitive pricing would hurt its margins. The company is also betting on new AI PCs to boost its traditional computer business. Revenue from Dell's infrastructure solutions group, which includes its AI servers, rose 34% to $11.37 billion, compared with estimates of $11.35 billion. The company's servers and networking revenue for the third quarter jumped 58% to $7.36 billion, but missed estimates of $7.64 billion. (Reporting by Zaheer Kachwala in Bengaluru; Editing by Shounak Dasgupta)

Dell Stock Slides After Revenue Falls Short of Estimates

Dell (DELL) posted third-quarter revenue that fell short of analysts' expectations, sending shares lower after the closing bell Tuesday. The server and personal computer maker delivered revenue of $24.4 billion, a 10% rise year-over-year, and below the analyst consensus from Visible Alpha. Its net income of $1.13 billion or $1.58 per share was up from $1 billion or $1.36 per share a year earlier, beating estimates. Server and networking revenue rose 58% to $7.36 billion, driven in part by demand for artificial intelligence (AI) servers. Server and networking revenue is part of Dell's infrastructure solutions group, which saw revenue rise 34% to $11.37 billion. The results come after Dell, which makes servers that utilize Nvidia (NVDA) AI chips, was mentioned during the chipmaker's earnings call last week. Shares of Dell fell 6% in extended trading following the release. They were up 85% from the start of the year through Tuesday's close.

Tech Stock Roundup: Nvidia Beats Expectations, Gains Fisher Bet; Eyes on Dell

In the meantime, investors are looking at Dell's third-quarter results. Nvidia continues to lead the tech sector, surpassing expectations with strong third-quarter earnings driven by booming demand for its artificial intelligence and data center chips. Meanwhile, Ken Fisher, the billionaire investor and founder of Fisher Investments, has placed significant bets on AI-focused companies like Nvidia and Microsoft, underscoring the importance of strategic timing in market cycles. Nvidia Beats Expectations Nvidia exceeded expectations in its third-quarter earnings, reporting adjusted EPS of $0.81 - against $0.75 expected - and revenue of $35.08 billion, compared to an estimated $33.16 billion. Net income surged to $19.3 billion, driven by strong demand for data center chips, generating $30.8 billion -- up 112% year-over-year. Gaming revenue also beat expectations at $3.3 billion. Looking ahead, Nvidia forecasts $37.5 billion in fourth-quarter revenue, slightly above analysts' estimates . Annual growth is projected at 70%, though slower than in previous quarters. The company's AI hardware dominance continues, fueled by its H100 and H200 GPUs and the expansion of its flagship Blackwell GPUs, which are now in full production. Despite a 94% year-over-year revenue jump, Nvidia's growth rate is decelerating. However, its market cap has reached $3.48 trillion, surpassing Apple's $3.40 trillion, with the stock up 187% year-to-date. Future growth is expected through ongoing AI and data center initiatives, though market risks from Fed policies remain. MicroStrategy on a Rollercoaster MicroStrategy's stock increased 25% last week but experienced notable volatility, particularly on Thursday, when shares dropped by 16%. The tech firm, known for its Bitcoin holdings, faced a significant setback after Citron Research took a short position against its stock. Despite this decline, investor and analyst sentiment toward MicroStrategy remains positive, with strong confidence in its future prospects. The drop in MicroStrategy stock came after Citron Research revealed it had shorted the company's shares, which had surged by 500% this year. However, despite Thursday's dip, the stock has climbed more than 50% since Donald Trump's election win earlier in November. Bitcoin rose about 30% during the same period, reaching a record high of $98,000 on Thursday. MicroStrategy made another major purchase of 55,500 Bitcoins between Nov. 18 and 24, bringing its total Bitcoin holdings to approximately $38 billion, making it the largest publicly traded corporate holder of the digital asset. Fisher Bets on AI Stocks Ken Fisher, founder and executive chairman of Fisher Investments, emphasized the importance of timing in investment cycles. He noted the first and second years of market cycles often yield mixed results, with markets rising only about 60% of the time. However, gains tend to be significant when they occur, making 2025 a pivotal year to "get it right." Fisher, with a net worth of $11.2 billion, is betting heavily on AI, focusing on giants like Nvidia and Microsoft. Fisher recently acquired 3.3 million shares of Nvidia, now his third-largest holding, worth $481.5 million. He sees Nvidia maintaining its dominance, thanks to its robust supply chain and full-stack AI ecosystem. Analysts rate the stock a Buy with a price target of $175, implying a 23% upside. Once the top market cap leader, Microsoft remains a key player in technology and AI. Despite concerns about slowing Azure growth, Fisher increased his Microsoft stake by 636,713 shares in the third quarter, making it his second-largest holding. Both Nvidia and Microsoft enjoy strong analyst support, with consensus ratings of Strong Buy and projected double-digit gains over the next year. Awaiting Dell's Results Dell Technologies (DELL) will report its fiscal third-quarter 2025 results on November 26. The company expects revenues between $24 billion and $25 billion, with a midpoint of $24.5 billion, reflecting 10% growth. Earnings per share are projected at $2.00. The consensus revenue estimate is $24.53 billion, suggesting a 10.25% year-over-year increase. The consensus for earnings is $2.05 per share, indicating a 9.04% growth from last year. Dell has exceeded earnings expectations in the last four quarters, with an average earnings surprise of 16.32%. Some analysts consider Dell to be well-positioned for strong results, driven by demand for AI-optimized servers. AI-related server sales were up 23% sequentially in the second quarter. However, declining consumer revenues and flat commercial client sales may affect growth, especially due to sluggish PC shipments. Gartner reported a 3.9% drop in Dell's PC shipments for the third quarter, the largest among major vendors. Year-to-date, Dell shares have surged by 82%, outperforming the microcomputer industry, which rose by 20%. Dell has outperformed peers like HPQ, Apple, and Lenovo in 2024, with Lenovo seeing a 15.2% decline.

Dell Could Be Poised to Benefit From AI Boom, Despite 'Messy' Results, Analysts Say

Dell Technologies (DELL) shares tumbled Wednesday in the wake of what JPMorgan called "admittedly messy" third-quarter results, but the bank's analysts said Dell could still be positioned to benefit long-term from the artificial intelligence (AI) boom. The server and personal computer maker delivered third-quarter revenue of $24.4 billion, a 10% rise year-over-year but below the analyst consensus from Visible Alpha. Its outlook for the fourth quarter also disappointed. Shares of Dell fell over 12% Wednesday to close at $124.38, though even with Wednesday's losses, they've gained more than 62% since the start of the year. JPMorgan reiterated its "overweight" rating and price target of $160 following Dell's results. Despite the revenue miss, "AI server demand momentum continues to build," the analysts noted, pointing to Dell's record quarterly backlog of $4.5 billion. Such a strong backlog, coupled with near-record AI server revenue, suggest "concerns on the results and [guidance] are likely overblown," they said. Morgan Stanley similarly maintained an "overweight" rating and a price target of $154. "DELL delivered where it needed to," the analysts said, adding "we have strong conviction that DELL is gaining momentum in a fast-growing market, supporting our view that AI server revenue will ramp well into next year."

Dell: Mizuho cuts PT on weak earnings, but sees long-term AI tailwinds By Investing.com

Investing.com-- Analysts at Mizuho cut their price target on Dell Technologies (NYSE:DELL) following weak earnings and guidance from the PC maker, but noted that Dell remains well-positioned to capitalize on the artificial intelligence boom. Mizuho (NYSE:MFG) cut Dell's price target to $150 from $155, and maintained the stock at Outperform. Dell reported revenue of $24.4 billion in the third-quarter, slightly below analyst expectations of $24.6 billion, and provided a conservative guidance for the fourth quarter, projecting revenue of $24.5 billion -- below the consensus estimate of $25.4 billion, according to Mizuho. Despite a 13% quarter-over-quarter increase in AI server orders, reaching $3.6 billion, revenue from AI servers fell 6% from the previous quarter. The slowdown in AI server revenue, coupled with modest guidance for the January quarter, led to a drop in Dell's stock price after hours. Dell shares slumped 11.3% to $125.75 in extended trading. However, the company's AI server backlog grew 18% to $4.5 billion, signaling long-term demand. Mizuho believes that Dell is gaining market share in AI servers, driven by innovations in power management and software integration. While AI server growth has faced "growing pains," Dell remains well-positioned to capitalize on the AI boom, with its pipeline increasing by over 50% quarter-over-quarter, the brokerage said in a note. The company's Infrastructure Solutions Group (ISG) posted a solid operating margin of 13.3%, up 230 basis points, despite the AI revenue decline. "We believe DELL's AI server ramp continues to take shape as it begins the ramp of Blackwell into 2025," analysts added. Blackwell is the upcoming line of next-generation AI chips from NVIDIA Corporation (NASDAQ:NVDA). Looking ahead, Mizuho sees strong tailwinds for Dell in 2025, including the ramp-up of its Blackwell AI servers and the upcoming Windows 10 end-of-life in 2025, which is expected to drive commercial PC sales.

Is Dell the Next Big-Time Artificial Intelligence (AI) Stock? | The Motley Fool

Dell Technologies (DELL -0.04%) may not seem like the most exciting stock in the world. Many investors probably know Dell from a laptop they own or use at work, and it may seem like the furthest thing from an exciting artificial intelligence (AI) stock. However, Dell also has a division within its company that builds data center servers, which have seen a massive boost in demand as the AI arms race continues. With another competitor potentially struggling in this realm, does it open the door for Dell to take a significant lead in this space? One of the biggest names in the server infrastructure space is Super Micro Computer (SMCI 15.87%), which has had some problems. On the company side, it has been accused of accounting issues, which triggered a Department of Justice probe and caused its auditor to resign after raising concerns. The company has hired a new auditor, but the damage to the stock has already been done, and investors who wanted to invest in the infrastructure side of AI may have already committed to investing in Dell. Furthermore, Supermicro is reportedly having issues delivering products as well. According to UDN, a Chinese media company, Elon Musk's xAI start-up has shifted all of its server orders from Supermicro to Dell. While there is no hard proof of this, it also aligns with other stories. According to Digitimes, Nvidia is moving orders of its new Blackwell chips away from Supermicro. These struggles from an industry leader could allow Dell to gain more market share, which could make it a viable AI investment. Dell is really a tale of two companies rather than a pure play on the server infrastructure business like Supermicro is. We've already talked about how its Infrastructure Solutions Group (ISG) is already benefiting from some AI orders but could see even more demand if it takes market share from Supermicro. Dell also has its Client Solutions Group (CSG), which provides the laptops and computers that investors are more likely to know. ISG is doing fantastically, with revenue rising 38% in the second quarter of fiscal 2025 (ended Aug. 2). Within ISG are two segments: servers and networking and storage. Storage didn't do so great, with revenue falling 5% year over year. However, servers and networking rose 80%, which shows how strong the demand for AI-related computing is today. CSG, which struggled over the past few years because a lot of laptop and desktop spending was pulled forward to 2020 and 2021 as people optimized their work-from-home setup, is still struggling with revenue falling 4% year over year. These two divisions make up a fairly even amount of revenue for the company, which is why total revenue only rose 9% year over year. However, this may not always be true if its ISG continues to produce outsized growth. This would be a huge boost in profits, as it is far more profitable than the CSG division. Data source: Dell. Dell's ISG division is projected to continue growing, which is huge news. But is it enough to make it a top AI stock pick? At first glance, Dell's stock looks super cheap at 17 times forward earnings. Investors may be tempted to go all-in because the S&P 500 trades for 24.6 times forward earnings. However, there's a reason why Dell's stock trades this cheaply. Over the long term, these tech commodity plays tend to be highly cyclical and have seldom produced long-term market-beating results. As a result, they trade at a discount to their peers. However, this time may be different, as there is a secular tailwind driving massive growth in its ISG sector. Still, with the laptop and desktop businesses struggling at best, I think investors can do better when looking for an AI stock, as there are many attractively priced businesses out there benefiting from the AI tailwind.

Dell Q3 Earnings Preview: Market Expert Says 'It's All About That Guide' - Dell Technologies (NYSE:DELL)

AI revenue and guidance are among the top items analysts and investors will be watching. Dell Technologies DELL stock is up over 90% year-to-date and investors will be looking for a streak of earnings beats to continue when the company reports third-quarter financial results after market close Tuesday. Earnings Estimates: Analysts expect Dell to report third-quarter revenue of $24.65 billion, up from $22.25 billion in last year's third quarter, according to data from Benzinga Pro. The company has beaten analyst estimates for revenue in three straight quarters and eight of the last 10 quarters overall. Analysts expect Dell to report third-quarter earnings per share of $2.05, up from $1.88 in last year's third quarter. The company has beaten analyst estimates in 10 straight quarters. Read Also: How To Earn $500 A Month From Dell Stock Ahead Of Q3 Earnings What Experts are Saying: Dell shares have rebounded since falling below $90 three months ago, but remain off of highs, Freedom Capital Markets Chief Global Strategist Jay Woods wrote in his weekly newsletter. "Dell Technologies shares suffered a big hit two quarters ago and have never recovered to those heights," Woods noted. Woods said that Dell's quarterly report is more about forward commentary than third-quarter results. "It's all about that guide." With Dell shares up in recent months, Woods said the long-term strength of the trend could be tested with a negative reaction. "Watch the moving averages on a dip to see if they hold the area between $120 and $125. If shares gap lower it may take months to get back on track." If the report is positive, Woods anticipates minor resistance at $150, noting "smooth skies to $160" once that level is surpassed. Woods indicated that, with strong earnings and guidance, a return to the all-time highs reached in May is also possible. Here are some other recent analyst ratings on Dell Technologies and their price targets: Evercore ISI: Reiterated Outperform rating with $150 price target. Well Fargo: Maintained Overweight rating and raised the price target from $140 to $160. Morgan Stanley: Maintained Overweight rating and raised the price target from $136 to $154. Key Items to Watch: Like many other technology companies, Dell's results could stress the importance of AI growth moving forward. "Our AI momentum accelerated in Q2, and we've seen an increase in the number of enterprise customers buying AI solutions each quarter," Dell Chief Operating Officer Jeff Clarke said after second-quarter results. Clarke said AI-optimized server demand was $3.2 billion in the second quarter, up 23% from the first quarter. The company's AI-optimized server backlog was $3.8 billion at the end of the second quarter. "And our pipeline has grown to several multiples of our backlog." Investors and analysts will be looking to see if this segment grew its backlog and posted revenue growth on a quarter-over-quarter basis once again. Client Solutions Group could be another area to watch, with second-quarter segment revenue of $12.4 billion down 4% year-over-year. DELL Price Action: Dell stock was trading 0.4% lower at $143.53 at the time of publication Tuesday, versus a 52-week trading range of $67.51 to $179.70. Dell stock is up 92.8% year-to-date in 2024. Read Next: Dell Ships First 72-Nvidia GPU Monster: 'AI Rocket Just Got A Massive Boost,' Says CEO Photo: Moment Capsule/Shutterstock.com Market News and Data brought to you by Benzinga APIs

HP's stock sinks on lower guidance, despite optimism in the PC market - SiliconANGLE

HP's stock sinks on lower guidance, despite optimism in the PC market HP Inc. delivered mixed financial results in its final quarter of fiscal 2024, and followed up with weak guidance for the current period. Investors recoiled, and the company's stock tumbled more than 7% in extended trading. The personal computer and printer manufacturer delivered fourth quarter earnings of 93 cents per share, exactly in-line with Wall Street's forecast, while revenue fell 4% from a year earlier to just $13.2 billion, below the analyst's target of $14 billion. Profitability took a hit as well, with HP reporting net earnings of $906 million for the quarter, down from $974 million one year earlier. The company also reported total revenue in fiscal 2024 of $53.6 billion, which was more or less flat compared to the prior year. HP President and Chief Executive Enrique Lores (pictured) said he was pleased enough with the company's performance, with revenue growing on a sequential basis for the second successive quarter. "With momentum heading into fiscal 2025, we are well-positioned to capitalize on the commercial opportunity and lead the future of work," he insisted. Analysts had expected HP's PC segment to deliver $9.8 billion in sales in the previous quarter, but the company came up just short of that target, reporting $9.6 billion, up 2% from a year earlier. Within that segment, commercial sales rose by 5%, while consumer sales fell 4%. Operating margins within the unit fell sharply from a year ago. On a call with analysts, Lores said the company is benefiting from commercial customers, which are looking to upgrade their PCs before Microsoft Corp. ends support for Windows 10-based computers in October 2025. However, he said the consumer PC market is under pressure, with many people holding off on buying a new computer in anticipation of a new generation of so-called AI PCs, which are able to run sophisticated artificial intelligence applications locally. AI PCs feature AI capabilities embedded into their hardware and software, which is typically graphics processing units or neural processing units. This enables them to handle complex AI tasks locally without needing cloud resources. HP recently announced a new lineup of AI PCs, featuring a new memory architecture that ensures high performance for more complex workflows and AI-enabled videoconferencing, but sales of those machines are yet to take off. The numbers tally with a recent report from International Data Corp., which said earlier this month that global shipments of PCs fell 2.4% in the third quarter, compared to the same period a year earlier. IDC analyst Jitesh Ubrani told Yahoo Finance that demand for PCs among consumers and commercial buyers is returning to the market. The problem is that most of that demand is concentrated on entry-level machines. But the analyst believes HP and other computer makers can be optimistic about the future. "Newer AI PCs such as Copilot+ PCs from Qualcomm along with Intel and AMD's equivalent chips as well as Apple's expected M4-based Macs are expected to drive the premium segment in coming months," Ubrani said. One pleasant surprise for analysts was the unexpected strength of its printer division, which ended a streak of 11 straight quarters of declining revenue. It delivered sales of $4.5 billion in the quarter, up 1% from a year earlier and above the Street's target of $4.2 billion. Some analysts have said HP's printing business might be benefiting from the ongoing strife at Xerox Corp., which is currently undergoing a deep restructuring of its business and losing market share due to it. Evercore analyst Amit Daryanani told Yahoo News that Xerox's printing equipment sales fell by double-digits in its most recent quarter, and said HP may be picking up some of that slack. Lores told analysts on the call that the company is "gaining share" but he cautioned that the printing industry as a whole is still volatile. "We think that the overall print market in 2025 will slightly decline," he warned. "The decline will be less than what we saw this year, but our goal continues to be to perform better than the market." HP will be hopeful that its printing business will also get an AI boost. In September it announced a new feature called Perfect Output, which uses AI algorithms to reformat and reorganize content from web pages to fit on the paper in a way that matches what the user sees on the screen. The tech also works with Spreadsheets, which tend to break across pages if columns exceed the page size, ensuring they fit nicely onto the printed page. Looking to the current quarter, HP forecast earnings of between 57 cents and 63 cents per share, some way below the Street's consensus estimate of 72 cents per share. Its full-year earnings forecast of $3.06 to $3.36 also came in some way below the Street's target of $3.85 per share. According to Lores, the lower guidance is partly due to the impact of potential tariffs that have been promised by incoming U.S. President Donald Trump. In what may well be an effort to soften the blow of its weak guidance, HP announced it will increase its quarterly dividend paid out to investors by 5%, to 29 cents per share. Prior to today's after-hours movement, HP's stock had gained around 30% in the year to date.

You're buying fat new servers to make room for AI, says Dell

But PCs and Nvidia are weak points, because you're not buying one and can't buy the other Dell believes its customers are consolidating server fleets to save energy and free up rack space for AI hardware - and has a giant jump in revenue to to prove it. The hardware giant on Tuesday delivered [PDF] its Q3 2025 results. Its Infrastructure Solutions Group was the star, posting $11.1 billion revenue - a 34 percent year-on-year jump. Of that, $7.4 billion came from servers and networking kit - categories that saw a collective 58 percent year-on-year revenue improvement. "Customers focused on consolidation and power efficiency by modernizing their datacenters, which frees up some volume - or space for AI infrastructure," CFO Yvonne McGill told investors on the earnings call. That modernization drive means customers are buying "more richly configured servers" that boast "denser core counts and more memory and storage per server." Dell's also managed to improve the margin it makes on servers, which helped to produce Net Income of $1.1 billion on $24.35 billion revenue - increases of 12 and ten percent, respectively. Yet the PC giant also lowered the midpoint its full-year revenue guidance from $97 billion to $96.1 billion, for two reasons. One is that a long-expected PC refresh cycle sparked by Windows 10 end-of-life isn't happening. "The PC refresh continues to move out," noted CEO Jeff Clarke. That was reflected in a one percent year-on-year revenue dip for Dell's Client Solutions Group, which won $12.1 billion of revenue. Of that, $10.1 billion came from commercial customers, who spent three percent more than in the same period last year. Clarke predicted "AI-driven hardware enhancements like battery life" will eventually spur buyers to open their wallets. The other reason is that Dell doesn't know when it will have Nvidia's Blackwell part to sell, so it can't ship some servers. Clarke revealed the GB200 accelerator is already on backlog. Not being able to ship Nvidia's latest gear also means associated storage, networking, and cooling product sales slowdown. Clarke assured investors once kit becomes available, Dell will cash in. Investors didn't like this story. Dell's share price dived from around $142 to just over $127 in after-hours trading. ®

Dell Technologies COO Clarke: 'The Opportunity In AI Is Enormous'

'Increasingly, enterprises see the disruptive nature and the innovation opportunities with GenAI, resulting in growing GenAI experimentation and proof of concepts. Underpinning our success is broad enterprise coverage, professional services, engineering leadership, and large-scale system design, all done with incredible speed and time to market. These highly specialized workloads and deployments require high value engineering and a solutions mindset, where custom designs and fast deployments are the norm,' says Jeff Clarke, Dell's vice chairman and chief operating officer. While Dell Technologies continues to see growth from its commercial PC, traditional server and storage businesses, the company said its focus on the infrastructure on which AI is built is set to supercharge its growth going forward. Jeff Clarke, Dell's vice chairman and chief operating officer, Tuesday told investors at his company's third fiscal quarter 2025 quarterly financial conference call that Dell delivered a combined 10 percent revenue growth in both its Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG). That growth is being led by AI-related technology, Clarke said. [Related: Nutanix's New Dell, Nvidia Alliances Meant To Advance AI, Multicloud] "We have seen sequential orders demand growth every quarter since the launch of the XE9680 [AI-focused rack server]," he said. "We shipped $2.9 billion of AI servers in Q3, resulting in AI server backlog of $4.5 billion. Our five-quarter pipeline grew more than 50 percent sequentially, with growth across all customer types. We continue to gain traction with enterprise customers large and small, with over 2,000 unique enterprise customers since launch." GenAI is proving to be a big future business driver, Clarke said. "Increasingly, enterprises see the disruptive nature and the innovation opportunities with GenAI, resulting in growing GenAI experimentation and proof of concepts," he said. "Underpinning our success is broad enterprise coverage, professional services, engineering leadership, and large-scale system design, all done with incredible speed and time to market. These highly specialized workloads and deployments require high value engineering and a solutions mindset, where custom designs and fast deployments are the norm." In response, Dell has accelerated the speed of innovation, Clarke said. The past two months have seen the launch of Dell's 21-inch ORv3 (Open Rack version 3) Integrated Rack 7000 in both a 44 OU (OpenRack unit) and 50 OU rack design with integrated cooling power and networking that is multi-generational and future-proof up to 480 kilowatts per rack, he said. It is aimed at meeting the demands of foundational training at the data center scale. Dell is also shipping what Clarke called the industry's first enterprise-ready Nvidia GB200 NVL72 server racks with its new XC9712 with direct liquid cooling and up to 72 GPUs per rack, and just unveiled a new NVL4 AI server with liquid cooling that supports up to 144 GPUs per rack. The company also offers the M7725, a dense compute design which supports up to 27,000 CPU cores per rack for high performance computing, he said. On the storage side, Dell has increased the density and performance of its PowerScale scale-out NAS storage systems. The new PowerScale F710 offers 61 terabytes of QLC SSDs and capacity density of 614 terabytes per rack unit with a new software release that works with 200-gigabit Ethernet support to increase streaming write performance by 163 percent and more than double streaming read performance, compared to the previous generation. "The opportunity in AI is enormous, and we are pushing the boundaries with our engineering and all of this innovation making its way into the enterprise," he said. Dell's traditional server demand improved double digits in the third fiscal quarter, the fourth consecutive quarter of year-over-year growth, driven by growing units and average selling prices thanks to improvements in core counts, memory, and storage per server, Clarke said. "Customers are focusing on consolidation and power efficiency by modernizing their data centers with more efficient and denser 16G servers, freeing up valuable floor space and power that will support their AI infrastructure," he said. Storage demand, however, continues to trail that of traditional servers, with PowerStore and PowerFlex demand growing double digits in the quarter, he said. Dell's Client Solutions Group saw continued stability with demand growth in commercial PCs for the third quarter in a row, Clarke said. "More enterprise customers are beginning to refresh, albeit modest and in a more price-competitive environment," he said. "We are seeing an indication that customers are lining up their upgrade cycles with new AI PCs in the first half of next year, a clear signal that enterprises are balancing their need to refresh and their desire to future-proof their purchases." Consumer demand and profitability continue to be challenged, Clarke said. "We are optimistic about the coming PC refresh cycle as the install base continues to age and with Windows 10 reaching end of life in 46 weeks," he said. "The significant advancements in AI-enabled architectures and application development are welcome tailwinds." All in all, AI has become a robust opportunity for Dell's ISG and CSG businesses, Clarke said. "Interest in our portfolio as an all-time high with no signs of slowing down," he said. "That said, this business will not be linear, especially as customers navigate an underlying silicon road map that is changing. Regardless, we are winning deals at a price premium to our competition, delivering value across a much broader AI ecosystem. We have the balance sheet to grow the business and the credibility to deliver on our commitments to our customers. When you pair this with a recovering traditional server market and pending PC refresh and our updated storage portfolio, we are extremely well positioned." Dell By The Numbers For its third fiscal quarter 2025, which ended November 1, Dell reported revenue of $24.37 billion, up about 10 percent over the $22.25 billion the company reported for its third fiscal quarter 2024. That included record third fiscal quarter 2025 ISG revenue of 11.4 billion, up 34 percent over last year. Servers and networking revenue was $7.4 billion, up 58 percent, thanks to demand growth across AI and traditional servers. Storage revenue was $4.0 billion, up 4 percent. Dell's total revenue for the quarter missed analyst expectations by $350 million, according to Seeking Alpha. Dell reported CSG revenue of $12.1 billion, down 1 percent over last year. Commercial client revenue was up 3 percent at $10.1 billion, while consumer revenue fell 18 percent to $2.0 billion. Dell also reported GAAP net income of $1.13 billion or $1.58 per share, up from last year's $1.00 billion or $1.36 per share. On a non-GAAP basis, Dell reported net income of $1.54 billion or $2.15 per share, up from last year's $1.39 billion or $1.88 per share. Non-GAAP earnings beat analyst expectations by 9 cents per share, according to Seeking Alpha. Looking ahead, Dell expects fourth fiscal quarter 2025 revenue of $24.0 billion to $25 billion, up 10 percent over last year at the midpoint, with ISG and CSG combined growing 13 percent at the midpoint. ISG growth is expected to be up in the mid-20-percent range driven by AI and traditional server growth. CSG growth is expected to be in the low single digits. Fourth quarter non-GAAP earnings per share is slated to grow by 14 percent over last year.