Why Dell Stock Plunged Today

Why Dell Stock Plunged Today

Actions of Dell Technologies (NYSE:DELL) plunged today as the company reported only modest growth in its first-quarter earnings report and disappointed its forecasts for the rest of the year.

As a result, the stock was down 19.6% as of 1:29 p.m. ET.

Why Dell Stock Plunged Today

Image source: Getty Images.

Dell misses the target

Dell has emerged as a potential winner in the artificial intelligence (AI) boom, but its overall performance is still held back by traditional technology companies.

Revenue for the quarter rose 6% to $22.2 billion, beating estimates of $21.64 billion. Revenue at the more AI-focused Infrastructure Solutions group increased 22% to $9.2 billion and included 42% growth in server and networking revenue to $5.5 billion. However, the PC-focused Client Solutions Group saw stable revenue growth at $12 billion.

Ultimately, adjusted earnings per share fell 3% to $1.27, essentially matching the consensus of $1.26.

Chief Financial Officer Yvonne McGill said: “We have once again demonstrated our ability to execute and generate strong cash flow, with AI continuing to drive new growth. » COO Jeff Clarke also noted that orders for AI-optimized servers increased sequentially to $2.6 billion, shipments increased more than 100% to 1, 7 billion dollars and that the order book had increased by more than 30% to reach 3.8 billion dollars.

What’s next for Dell

Dell’s guidance for the rest of the year also fell short of expectations. The company expects adjusted earnings per share (EPS) of $1.55 to $1.75 for the quarter, which is below the consensus of $1.84.

For the full year, it expects adjusted EPS of $7.40 to $7.90, which is slightly below the average estimate of $7.69 at the midpoint of the range.

Dell shares have already risen significantly over the last year, and 6% revenue growth and a decline in adjusted EPS aren’t going to excite investors, despite the company’s AI potential.

If investors are looking to capitalize on the growing demand for AI serversThey better look at a peer like Super microcomputerwhich is growing much faster.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the securities mentioned. The Mad Motley has a disclosure policy.

Why Dell Stock Plunged Today was originally published by The Motley Fool

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