Dell’s Stock Falls On Weak Third-Quarter Guidance

The stock of Dell Technologies (DELL) is down 7% after the personal computer maker issued weak forward guidance for the current third quarter of the year.

Texas-based Dell beat Wall Street’s forecasts with its second-quarter financial results, announcing earnings per share (EPS) of $2.32 U.S. versus a consensus estimate of $2.30 U.S.

Revenue in Q2 totaled $29.78 billion U.S., which was ahead of the $29.17 billion U.S. expected on Wall Street. Sales were up 19% from a year earlier.

Dell also raised its full-year outlook for revenue to $107 billion U.S. at the midpoint and earnings per share of $9.55 U.S., besting Wall Street estimates of $104.6 billion U.S. and $9.38 U.S.

However, the decent print was overshadowed by a third-quarter earnings outlook that was below analysts’ consensus views, sending its share price lower.

Dell’s guidance for third-quarter earnings of $2.45 U.S. a share came up short of the $2.55 U.S. that was expected. A Q3 revenue outlook of $27 billion U.S. topped Wall Street estimates of $26.1 billion U.S.

Dell said that its profit forecast for 2025 is concentrated in the fourth quarter of the year because of seasonality, with year-end holiday sales expected to drive sales of its laptop computers.

In terms of its Q2 results, they were largely driven by Dell’s Servers and Networking unit, which includes artificial intelligence (A.I) servers. Sales in that segment totaled $12.9 billion U.S., up 69% year-over-year.

Management said Dell has shipped $10 billion U.S. of A.I. servers in its past two quarters. The company’s servers run Nvidia (NVDA) microchips and processors.

Executives at Dell added that they now plan to ship a total of $20 billion U.S. of A.I. servers in the current fiscal year, double what it sold the previous year.

However, Dell’s storage revenue declined 3% to $3.86 billion U.S. and its personal computer

sales rose 1% on an annual basis to $12.5 billion U.S. in this year’s second quarter.

The company spent $1.3 billion U.S. on share repurchases and dividends during Q2.

Prior to today (Aug. 29), DELL stock had risen 15% this year to trade at $134.05 U.S. per share.