Dell Stock Jumps as Q3 Earnings Beat Expectations Despite Revenue Miss

TLDR

• Dell reported Q3 earnings of $2.59 per share, beating estimates, but revenue of $27.01 billion missed expectations
• Company increased AI server revenue forecast to $25 billion for fiscal 2026, up from $20 billion
• Q4 revenue guidance of $31.5 billion exceeded analyst estimates of $27.59 billion by nearly $4 billion
• AI server backlog grew to $18.4 billion with $12.3 billion in new orders
• David Kennedy appointed permanent CFO as Dell raises full-year revenue outlook

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Dell Technologies posted mixed third-quarter results that left investors focused on the future rather than the present. The company missed revenue targets but delivered a forecast that sent shares climbing 5% in extended trading.

Revenue reached $27.01 billion, falling short of the $27.13 billion analysts expected. Earnings per share of $2.59 beat the $2.47 consensus estimate. Net income climbed to $1.54 billion from $1.17 billion a year earlier.

Dell Technologies Inc., DELL

The real story emerged in Dell’s guidance. The company expects fourth-quarter revenue of roughly $31.5 billion. That’s nearly $4 billion above Wall Street’s $27.59 billion estimate.

AI Infrastructure Drives Growth

Dell’s AI server business is firing on all cylinders. The company now projects $25 billion in AI server revenue for fiscal 2026. That’s a $5 billion increase from its previous $20 billion forecast.

Third-quarter AI server shipments hit $5.6 billion. The backlog swelled to $18.4 billion, powered by $12.3 billion in fresh orders. Dell expects to move $9.4 billion worth of AI servers in Q4 alone.

Major customers include xAI, CoreWeave, the U.S. Department of Energy, and G42. A November deal with Iren to supply Nvidia GB300 systems for Microsoft wasn’t included in the Q4 forecast.

Infrastructure Solutions Group revenue reached $14.11 billion, matching estimates. Server and networking sales jumped 37% year-over-year to $10.1 billion.

PC Business Continues Decline

The traditional computer business tells a different story. Client Solutions Group revenue of $12.48 billion grew just 3% and missed the $12.65 billion estimate.

Commercial PC and laptop sales dropped 7% from last year. Consumers and businesses aren’t rushing to upgrade existing machines. The weak demand persists across the personal computer market.

Cost Pressures Mount

Rising memory chip prices threaten margins. DRAM and NAND costs are climbing faster than Chief Operating Officer Jeff Clarke has ever seen.

Strong demand gives Dell pricing leverage. When orders exceed supply, sellers gain negotiating power.

Dell appointed David Kennedy as permanent CFO. The company raised full-year revenue guidance to between $111.2 billion and $112.2 billion. Previous expectations ranged from $105 billion to $109 billion.

The company returned $1.6 billion to shareholders through buybacks and dividends. Fourth-quarter earnings per share are forecast at $3.50, above the $3.21 estimate.

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