Dell execs sound alarm with consumer comments

Jeff Clarke was feeling the love.

Clarke, vice chairman and chief operating officer of Dell Technologies (DELL) , was giving analysts the rundown on the tech company's first-quarter report.

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The report included a backlog of orders for confirmed artificial intelligence systems valued at $14.4 billion.

“We love where the backlog is,” Clarke said during the Round Rock, Texas, computer maker's earnings call. “It's healthy.”

He said Dell was off to a good start “but we have much in front of us.”

“The customer deployments that we have in front of us are large, they’re complex, they have very detailed scheduled deliveries,” Clarke said. “There’s lots of dependencies on this. We’ve talked about this business being lumpy and nonlinear.”

While AI momentum remained strong, he said, “given the scale of these opportunities, variability and timing and choices around technology, the inherent nonlinear nature of demand and associated shipments is likely to persist.”

Dell says it had more than $12 billion in AI orders.

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Dell CEO: consumer market challenged

Dell's fiscal-first-quarter earnings missed Wall Street expectations, but the revenue number beat estimates and the forecast for the current quarter was stronger than Wall Street expected.

Clarke told analysts that Dell executed very well in the quarter, “achieving growth across our core markets.” Demand for AI-optimized servers was “exceptionally strong,” he said.

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Dell built “on the momentum discussed in February and further [demonstrated] that our differentiation is winning in the marketplace,” he said, referring to the company's previous quarterly report.

“We had over $12 billion in AI orders this quarter alone, which will drive significant revenue growth and EPS,” he said.

Still, Clarke said “the consumer market remains challenged.”

“Consumer revenue declined 19% and the industry pricing remained competitive,” he said.

Yvonne McGill, Dell's chief financial officer, said the company was expecting “subseasonal performance in traditional server and storage, our larger profit pools that provide scale, as customers evaluate their IT [spending] for the year given the dynamic [macroeconomic] environment.”

“We saw strong performance across small and medium business and large enterprise,” she said. “In consumer, the demand environment remains soft and profitability remains challenged.”

McGill said Dell was focused on executing within the Client Solutions Group to capture the Microsoft (MSFT) Windows PC refresh.

Clarke said that while the PC refresh remains behind prior cycles, “we are seeing indicators that the installed base is upgrading to new Windows 11 PCs, many of them AI PCs.”

Analyst cites AI server orders

Dell is one of AI-chip maker Nvidia’s (NVDA) primary vendors, and the U.S. Department of Energy said its Doudna computer, due in 2026, will use technology from the two tech companies.

The computer, named for the Nobel Prize-winning scientist Jennifer Doudna, who made key Crispr gene-editing discoveries, will be housed at Lawrence Berkeley National Laboratory in Berkeley, Calif., Reuters reported.

Dell shares are down nearly 35% from a year ago and off 3.4% this year.

Several investment firms issued research reports after the company reported its results.

Bank of America Securities raised its price target on Dell to $155 from $150 and affirmed a buy rating on the shares.

Earnings came in at the low end of guidance due to modest tariff impacts to margins at Client Solutions and slightly weaker growth from Intelligent Security Systems, the company's video-management and -analytics software solutions, the investment firm said.

At “the highest level,” B of A said Dell could deliver significantly higher AI server revenue over the next two years of greater than $30 billion with strong upside to EPS with momentum in AI servers picking up.

JP Morgan raised its target on Dell to $125 from $111 and maintained an overweight rating, according to The Fly.

AI-server demand and orders in Q1 as well as greater than typical deployment expectations for Q2 “were the bright spot in an otherwise subdued outlook,” JP Morgan wrote.

Dell's traditional Enterprise demand drivers are softer and driving incremental caution into the back half of the year, the firm said.

TD Cowen analyst Krish Sankar boosted the firm's price target on Dell Technologies to $125 from $120 and reiterated a hold rating.

He called the $12 billon of April-quarter AI-server orders and expected July-quarter AI shipments of roughly $7 billion key positives.

The macroeconomic environment might present a modest headwind for traditional server and consumer demand while tariffs and commodity costs are inflationary factors.