Key Stats for Dell Stock
- Price Change for $DELL stock: 6%
- Current Share Price: $134
- 52-Week High: $148
- $DELL Stock Price Target: $142
What Happened?
Dell Technologies (DELL) stock is down over 6% despite reporting second-quarter results that exceeded expectations on both revenue and earnings.
The company reported adjusted earnings per share of $2.32, exceeding the estimated $2.29, while revenue of $29.78 billion surpassed the consensus of $29.19 billion.
However, investors focused on Dell’s third-quarter EPS guidance of $2.45, which fell short of Wall Street’s expectation of $2.55 per share.
This disappointment overshadowed Dell’s strong performance in AI servers, where it shipped a record $8.2 billion and raised full-year AI server guidance to $20 billion from $15 billion previously.
Dell’s servers and networking revenue surged 69% year-over-year to $12.9 billion, driven by robust demand for AI.
It has now shipped $10 billion in AI servers over the past two quarters, matching its entire AI server output from last year.
See analysts’ growth forecasts and price targets for Dell stock (It’s free!) >>>
What the Market Is Telling Us About Dell Stock
The sell-off reflects investor sensitivity to near-term margin pressures, despite Dell’s impressive momentum in AI.
Management explained that Q3 profitability will be impacted by business mix, with improved margins expected in Q4 due to storage business seasonality and better AI server economics.
Dell’s storage revenue declined 3% to $3.86 billion (missing $4.1 billion estimates), and modest 1% growth in its client solutions group highlighted challenges in non-AI segments.
Dell attributed the storage weakness to slower demand from large accounts in North America and enterprises rethinking their private cloud strategies.
While Dell raised full-year revenue guidance to $107 billion and EPS to $9.55 (both above estimates), the quarterly guidance miss suggests margin headwinds from ramping AI production and supply chain costs.
Management noted one-time expenses from expediting materials and reconfiguring supply chains for Blackwell deployments.
The market appears concerned that Dell’s rapid scaling of AI may pressure near-term profitability, despite the long-term growth opportunity.
With AI representing nearly half of ISG revenue in Q2, the shift in mix toward lower-margin AI servers is creating temporary headwinds that should improve as the business matures and enterprise adoption accelerates.
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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 stocks mentioned. Thank you for reading, and happy investing!
