Key Takeaways
- Dell fell another 11% today with no news of its own, as the tech sell-off that followed Democrats’ midterm wins deepened.
- Analysts expect Dell’s earnings to more than double this fiscal year, yet its forward P/E is back near its 5-year average.
- Hewlett Packard Enterprise and Super Micro Computer are falling too, on data center politics and memory costs.
- Dell’s Nov. 24 report has to show its $95 billion AI backlog holding.
Dell Technologies (DELL) is down another 11% today, after an 8% drop on Wednesday, and it hasn’t put out any news of its own.
It has company. Hewlett Packard Enterprise (HPE) and Super Micro Computer (SMCI) are each down 9%, as the sell-off that began after Democrats’ larger-than-expected midterm wins deepens.
Two new worries for AI hardware
Texas voters elected a governor who has promised a moratorium on data center construction, and Texas holds more than 25% of planned US data center capacity through 2030, according to Yahoo Finance.
Memory is the other worry. Qualcomm issued a weak forecast after Wednesday’s close as a memory shortage weighs on smartphone sales, and Micron Technology (MU) is down 12% too.
Intel warned last week that memory prices are shrinking the PC market, while server CPU units grow more than 30% this year and next. Dell sits on both sides of that: PCs earned 19% of its segment operating income in the quarter ended July 31, and servers, storage and networking the rest.
Margins are the real question
Super Micro’s September-quarter revenue nearly quadrupled from a year earlier to $19.9 billion, but its gross margin fell to 12.7% from 17.5% the quarter before.
HPE’s Cloud & AI segment, by contrast, earned a 17.0% operating margin in its July quarter, up from 7.0% a year earlier. It reports later this month, just ahead of Dell, so its server margin is the first read on Dell’s.
TIKR tracks 29 analysts on Dell Technologies. How many say “Buy”?
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Dell’s earnings are still climbing
Analysts expect Dell’s normalized EPS to rise from $10.30 in the year ended January 2026 to $25.90 this fiscal year and $30.26 the next:
Nothing Dell has said this week gives analysts a reason to cut.
The stock has gone the other way. Dell traded at 14x forward earnings at Wednesday’s close, down from 26x in mid-August and close to its 5-year average of 12x. At today’s price, it’s about 13x:
The backlog has to hold
Much of Dell’s margin jump came as it raised prices in a memory shortage, and a data center slowdown would hit its AI orders.
Still, the market is now paying Dell’s usual multiple for earnings analysts expect to more than double. That looks like an opportunity to me, as long as the AI racks keep shipping.
The next test is Dell’s third-quarter report on Nov. 24, where management has guided to $19 billion of AI server revenue.
So what is Dell stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
