Can Dell become the next $100 billion chip stock as AI sales surge?
Shares of Dell Technologies (NYSE:DELL) soared 24% in premarket trading Friday after the technology solutions provider released better-than-expected Q4 results amid “strong AI-optimized server momentum.” Dell stock is already up 26.5% since the start of 2024, outperforming the broader S&P 500 which gained 7.5% during that period.
For the quarter ending February 2, Dell surpassed analyst expectations with adjusted earnings per share (EPS) of $2.20 on revenue of $22.32 billion. Analysts had forecast EPS of $1.73 on revenue of $22.16 billion.
The company experienced significant growth in its Infrastructure Solutions Group (ISG), which focuses on AI servers, reporting a 10% sequential increase in revenue to $9.33 billion. Year-over-year, revenue for this segment was down 6%.
“Our strong AI-optimized server momentum continues, with orders increasing nearly 40% sequentially and backlog nearly doubling, exiting our fiscal year at $2.9 billion,” Dell’s Chief Operating Officer Jeff Clarke said in the release.
Conversely, Dell's Client Solutions Group, encompassing the PC business, saw a 12% year-on-year decline in revenue, amounting to $11.72 billion in the fourth quarter.
The revenue from servers and networking, primarily driven by AI-optimized servers, was $4.9 billion, while storage revenue stood at $4.5 billion.
Moreover, the Texas-based tech company also announced a 20% increase in its annual dividend to $1.78 per share.
Looking ahead to the first quarter, Dell anticipates revenue to be between $21 billion and $22 billion, as stated during its quarterly earnings call with investors.
It feels optimistic about the potential for growth driven by AI technology for fiscal 2025 but also noted caution among some customers due to
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