Key Takeaways:
Dell Technologies Inc. shares climbed about 4 percent on Tuesday, extending this year's rally as investors positioned for fiscal first-quarter results that will test whether surging AI infrastructure demand can sustain the stock's momentum.
"The market is pricing in another strong quarter from Dell's AI server business, but the bar is high after the stock's run," said Sarah Lin, equity analyst at a New York-based research firm. "Guidance will matter more than the headline numbers."
The company is scheduled to report after the market closes on May 28. Analysts expect Dell to post revenue of $24.5 billion for the quarter ended April, according to consensus estimates compiled by Bloomberg, with the Infrastructure Solutions Group — which includes AI-optimized servers — seen as the primary growth driver. Dell's server business has benefited from corporate spending on Nvidia Corp.-powered systems for training and running large language models.
Dell shares have more than doubled over the past 12 months, outpacing the S&P 500's 14 percent gain, as the company emerged as a key beneficiary of the AI infrastructure buildout alongside Super Micro Computer Inc. and Hewlett Packard Enterprise Co. The stock trades at about 18 times forward earnings, a discount to Super Micro's 28 times, reflecting lingering concerns about margin pressure in the low-margin server assembly business.
The stakes are high for Dell's outlook. A guidance raise would signal that AI-related demand continues to accelerate beyond enterprise pilot phases into broad deployment, while a miss could trigger a sharp pullback in a stock that has already priced in significant optimism. Investors will scrutinize the Infrastructure Solutions Group's profit margins and any commentary on the pace of AI server orders during the earnings call on May 28.
This article is for informational purposes only and does not constitute investment advice.
