Dell Technologies (DELL) stock tumbled late Tuesday after the tech hardware company reported mixed fiscal third quarter results. Earnings beat estimates while sales came up short despite strong growth from AI-related server sales.
Dell said in a news release that it earned an adjusted $2.15 per share on sales of $24.4 billion for the October-ended quarter. Analysts polled by FactSet projected the Round Rock, Texas-based company would post adjusted earnings of $2.06 per share on sales of $24.7 billion.
Revenue grew 10% while adjusted earnings increased 14% year-over-year.
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On a call with analysts, company officials guided for sales of $24.5 billion at the midpoint of its range for its current January-ending quarter. That was below consensus analyst forecasts of $25.6 billion in sales for Dell’s fiscal fourth quarter, according to FactSet.
On the stock market today, Dell stock fell more than 10% to 127.28 in after-hours action.
Dell Stock: AI Server Boost
Prior to earnings, Dell stock fell 1.7% in Tuesday trading. Shares have gained 87% this year, helped by Dell’s position as a provider of servers to power artificial intelligence workloads.
Dell Chief Operating Officer Jeff Clarke said in the earnings release Tuesday that AI is “a robust opportunity for us with no signs of slowing down.”
Revenue from sales of servers and networking equipment increased 58% year-over-year to $7.4 billion in the quarter, Dell said.
Overall sales for Dell’s Infrastructure Solutions Group increased 34% to $11.4 billion.
Dell’s Client Solutions Group, which sells PCs, reported revenue of $12.1 billion, down 1% year over year.
Coming into the report, Dell stock had an IBD Composite Rating of 54 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
But Dell’s IBD Relative Strength Rating was 90 out of 99. The RS Rating means that Dell has outperformed 90% of all stocks in IBD’s database over the past year.
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