Dell shares slump as Q4 guidance falls short; Q3 earnings beat estimates

Investing.com -- Dell Technologies shares fell sharply after the company guided fourth-quarter revenue below Wall Street expectations amid weaker demand for its traditional PCs and competition from peers.

Dell Technologies Inc (NYSE:DELL ) was down more than 11% in after-hours trading following the report.

For the third quarter, the AI server maker reported adjusted earnings per share (EPS) of $2.15 on revenue of $24.4 billion, compared with estimates for $2.06 per share and $24.69B, respectively.

Revenue was hurt by a performance in the company’s client solutions group, which includes PCs and laptops, saw revenue fall 1% to $12.1B year-on-year in Q3.

The infrastructure solutions group saw revenue jumped 34% YoY in Q3, driven by strong AI-related demand. 

Consumer revenue fell down 18% to $2B.

Looking ahead to the fourth quarter, Dell forecast revenue between $24 billion and $25 billion, missing the average analyst projection of $25.57 billion, according to LSEG data. 

Commenting on the report, Deutsche Bank (ETR:DBKGn ) analysts believe Dell's weaker Q4 guide comes mainly due to delays in AI server sales and PC refresh activity. 

"To be clear, we believe these headwinds are generally more deferrals/delays than anything else (ie: not lost revenue), that should theoretically enhance the set up for DELL entering FY26E," analysts said.

"That said, near-term estimates are likely to trend lower post print, and hence we expect a negative reaction in shares, given the strength seen year to date," they added.

However, analysts at Morgan Stanley (NYSE:MS ) described the investor reaction as "overdone," adding they "would be buyers post-earnings."

Yasin Ebrahim contributed to this report.

   

Source: Investing.com