Dell Technologies DELL is scheduled to report its third-quarter fiscal 2025 results on Nov. 26.
Dell expects third-quarter revenues in the range of $24-$25 billion, with a midpoint of $24.5 billion, indicating 10% growth. Earnings are expected to be $2 per share (+/- 10 cents).
The Zacks Consensus Estimate for revenues is pegged at $24.53 billion, suggesting 10.25% growth from the figure reported in the year-ago quarter.
The consensus mark for quarterly earnings is pegged at $2.05 per share, unchanged over the past 60 days and suggesting year-over-year growth of 9.04%.
Dell’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters, with an earnings surprise of 16.32%, on average.
Dell Technologies Inc. Price and EPS Surprise
Dell Technologies Inc. Price and EPS Surprise
Dell Technologies Inc. price-eps-surprise | Dell Technologies Inc. Quote
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Let’s see how things have shaped up for DELL shares prior to this announcement.
Key Factors to Note for DELL
Dell is well-poised to report solid results in the fiscal third quarter, driven by its portfolio strength and an expanding partner base that includes NVIDIA NVDA, Advanced Micro Devices AMD, Intel INTC, and Nokia, among others.
Dell’s fiscal third-quarter results are expected to have benefited from the robust demand for AI-optimized servers. In the fiscal second quarter, AI-optimized server demand increased to $3.2 billion, up 23% sequentially, with shipments up to $3.1 billion.
However, declining consumer revenues and flat commercial client revenues in the fiscal second quarter reflect weakening demand across key segments.
Sluggish PC shipments in the consumer segment are expected to have hurt DELL’s top-line growth in the to-be-reported quarter amid continued consumer demand challenges and competitive pressures.
Per Gartner’s latest report, DELL witnessed the largest decline in worldwide PC shipments in the third quarter of 2024, with a 3.9% year-over-year drop, followed by ASUS, which saw a 3% decline. Dell and ASUS were the only vendors to report year-over-year shipment decreases.
DELL Shares Outperform Sector
Year to date, Dell shares have returned 81.6%, outperforming the broader Zacks Computer & Technology sector’s return of 27.4% and the Zacks Computer-Micro Computer industry’s return of 19.8%.
Except for NVIDIA, Dell Technologies shares have outperformed peers, including HPQ, Apple, and Lenovo. Year to date, NVIDIA, HPQ and Apple have returned 196.1%, 26% and 18.7%, respectively. Lenovo shares have lost 15.2% year to date.
Year-to-Date Performance Chart
Zacks Investment Research
Image Source: Zacks Investment Research
DELL stock is cheap, as the Value Score of B suggests.
Dell stock is trading at a significant discount with a forward 12-month Price/Earnings (P/E) of 14.89X compared with the Zacks Computer-Micro Computer industry’s 26.86X.
P/E Ratio (F12M)
Zacks Investment Research
Image Source: Zacks Investment Research
Dell Stock Rides on Strong Portfolio, Partner Base
DELL shares are riding on strong demand for AI servers driven by ongoing digital transformation and heightened interest in generative AI (GenAI) applications. The total addressable market (TAM) for AI hardware and services is $174 billion, growing at a Compound Annual Growth Rate of 22%.
Dell’s AI server backlog was $3.8 billion in second-quarter fiscal 2025.
Dell AI Factory launch has been a key catalyst. It combines Dell’s solutions and services optimized for AI workloads and supports an open ecosystem of partners comprising NVIDIA, Meta Platforms, Microsoft and Hugging Face.
NVIDIA has played a pivotal role in developing the Dell AI Factory. The collaboration integrates Dell’s portfolio with NVIDIA’s AI Enterprise software platform and Tensor Core GPUs, enhancing compute value and simplifying AI application development and deployment for faster time to value.
Dell and Ericsson are collaborating to develop tailored network cloud infrastructure plans and advise communications service providers on their cloud transformation journeys. The commercial introduction of Ericsson Cloud RAN software on Dell PowerEdge servers with continuous testing and lifecycle management is noteworthy.
Dell has recently partnered with Nutanix to accelerate digital transformation by integrating Nutanix Cloud Platform with Dell’s servers and storage solutions. This aims to enable streamlined hybrid multi-cloud deployments and independent scaling of compute and storage.
Dell also boasts a robust IP core storage portfolio featuring PowerMax, PowerScale, PowerStore and PowerProtect Data Domain, which continue to experience strong demand.
What Should Investors Do With DELL Stock?
Dell’s robust and expanding partner base are key drivers that make the stock attractive for long-term investors. Dell’s Growth Score of B makes the stock attractive for growth-oriented investors.
Hence, investors who already own the stock may expect the company’s growth prospects to be rewarding over the long term.
DELL shares are also trading above the 50-day and 200-day moving average, indicating a bullish trend.
DELL Shares Trade Above 50-Day and 200-Day SMA
Zacks Investment Research
Image Source: Zacks Investment Research
However, challenges in the PC market are a headwind in the near term.
DELL currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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