Dell Technologies reported strong growth in AI, but struggles elsewhere in fiscal Q3. The performance paints a mixed picture
The company posted revenue of $24.4 billion, up 10%, missing Wall Street’s consensus of $24.7 billion, while adjusted earnings per share of $2.15 beat expectations of $2.06.
However, Q4 guidance of $24-25 billion fell short of the consensus of $25.6 billion, and led to an 11% decline in after-hours trading.
AI continues to be a major driver for Dell. The company generated $2.9 billion in AI server revenue in Q3, bringing its backlog to $4.5 billion, up from $3.8 billion in the previous quarter.
AI server orders hit a record $3.6 billion, and its AI pipeline expanded by 50%.
Dell was also the first to ship Nvidia’s GB200 NVL72 Blackwell hardware, a cutting-edge AI product that improves model training and query efficiency for enterprise customers.
These developments solidify Dell’s leadership position in AI infrastructure.
The Infrastructure Solutions Group, which includes AI servers, performed well, generating $11.4 billion in revenue, up 34% from the previous year. Operating margins for the segment also improved to 13.3% from 11.0% in Q2 and 8.0% in Q1, reflecting better pricing discipline and a shift toward in-house intellectual property.
However, Dell’s Client Solutions Group, which includes its PC business, struggled.
Consumer sales fell 18%, while revenues fell 1% to $12.1 billion.
Enterprise customers have delayed PC upgrades in anticipation of next-generation AI-enabled models expected next year.
This trend is consistent with broader market caution and Microsoft’s 2025 end-of-support date for Windows 10, which could trigger a significant refresh cycle.
Dell’s strong stock performance to date — up 85% compared to a 28% gain for the Nasdaq Composite — underscores investors’ confidence in its AI-focused strategy.
Despite the short-term challenges, Dell’s growing AI stack and advanced AI solutions continue to deliver. The company remains a formidable competitor, leveraging its differentiated offerings to navigate an evolving market.
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*Source: Barron’s , MarketWatch
