Dell Technologies Inc. (NYSE: DELL) reported better-than-anticipated fiscal 2025 first-quarter results. The company has also risen as a leading supplier of AI-focused servers, whose demand has skyrocketed with the growth of the generative AI domain. However, the company issued lower-than-anticipated second-quarter guidance while upwardly revising the FY 2025 revenue outlook. Following the results, the stock of Dell, which has rallied over 100% so far this year, lost $30.36, or 17.87%, to end Friday’s trading session at $139.56.
The Round Rock, Texas-based company reported first-quarter revenues of $22.24 billion, an increase of 7% from $20.92 billion in a similar quarter of fiscal 2024. This is the first increase in revenue after six quarters of declines.
For the first quarter, in the quarter that concluded May 3, 2024, Dell posted a net income of $955 million, or $1.32 per share, compared with $578 million, or $0.79 per share, in the quarter that ended May 5, 2023.
Excluding amortization of intangibles, stock-based compensation expense, other corporate expenses, and fair value adjustments on equity investments, among others, Dell recorded Q1 2025 non-GAAP income of $923 million, or $1.27 per share, down 4% from $963 million, or $1.31 per share, in Q1 2024.
Analysts polled by LSEG had expected Dell to report earnings of $1.26 per share on revenues of $21.64 billion.
Commenting on the results, Yvonne McGill, CFO, stated, “We again demonstrated our ability to execute and deliver strong cash flow, with AI continuing to drive new growth.”
Segment wise:
- Product revenues surged 7% y-o-y to $16.13 billion.
- Services revenues were $6.12 billion, an increase of 4% from last year.
Considering the characteristics of product offerings:
- The revenues of Infrastructure Solutions Group (ISG), which offers servers and networking products, jumped 22% y-o-y to $9.23 billion. Specifically, server sales rose by 42% y-o-y to $5.50 billion.
- The revenues of Client Solutions Group (CSG), which offers PCs and laptops, were $11.97 billion, almost flat from last year.
The company’s COO, Jeff Clarke, revealed that Dell delivered $1.70 billion worth of AI-fine-tuned servers. Notably, the company’s server order backlog grew by 30% to $3.80 billion in 1Q 2025.
Looking ahead, Dell projects Q2 revenues in the range of $23.50 billion to $24.50 billion. The company also forecasts earnings of $1.65 per share (+/- $0.10 per share). Analysts surveyed by FactSet anticipate earnings of $1.84 per share on revenues of $23.35 billion.
For FY 2025, Dell now expects revenues in the range of $93.50 billion to $97.50 billion. This compares with the previous guidance range of $91 billion and $95 billion.
Furthermore, the company expects its adjusted gross margin to fall by roughly 150 basis points in fiscal 2025.
The quarterly earnings beat, weak second-quarter outlook, and caution over profit margin are expected to keep Dell’s stock range-bound in the near term.
The stock of Dell is declining after facing resistance at $145. The next support is anticipated to be only near $115. Additionally, the stochastic indicator is descending towards the bearish zone. Therefore, we anticipate Dell’s stock to remain in a downtrend for the next few trading sessions. It would be prudent to open a short position after the stock closes below its 50-day moving average.
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