Several technology stocks stumbled after releasing earnings last week, marking a soft finish to the reporting season.
Dell Technologies (DELL) was one of them. The company reported second-quarter earnings and revenue that beat Wall Street's forecast, but issued soft earnings outlook for the current quarter. The stock lost 8.88% on Aug. 29.
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Dell is not just a traditional PC seller now. The company is now a major customer and partner of artificial intelligence chipmaker Nvidia (NVDA) . It builds AI servers using Nvidia’s chips and sells them to other companies such as CoreWeave (CRWV) .
Last year, Dell announced that it was building an AI factory with Nvidia. In May, the two companies announced Doudna, a supercomputer due in 2026 for the U.S. Department of Energy.
“Nobody is better at building end-to-end systems of very large scale for the enterprise than Dell,” Nvidia CEO Jensen Huang said last year.
Dell stock surged more than 50% in 2024 on the market’s high expectations on its business around AI. But year-to-date, the stock is up just 6%, while the S&P has gained nearly 10% over the same period.
Dell issued soft Q3 earnings forecast
In the second quarter, Dell reported adjusted earnings per share of $2.32, slightly ahead of the $2.30 expected by analysts. Revenue came in at $29.78 billion, topping estimates of $29.17 billion.
Dell has raised its full-year outlook, now projecting revenue of $107 billion at the midpoint and diluted earnings per share of $9.55, above Wall Street estimates of $104.6 billion and $9.38 per share.
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“We’ve now shipped $10 billion of AI solutions in the first half of FY26, surpassing all shipments in FY25,” said Jeff Clarke, chief operating officer of Dell Technologies. “Demand for our AI solutions continues to be exceptional.”
However, the company guided its third-quarter earnings per share at $2.45, below analysts' estimate of $2.55. Revenue forecast of $27 billion beat expectations of $26.1 billion.
The company added that a larger portion of profit is expected in the fourth quarter, driven by seasonality, particularly in its storage business.
Analysts raise Dell stock price target after earnings
Even with soft earnings guidance, several analysts have raised their stock target on Dell.
UBS raised the firm's price target on Dell Technologies to $155 from $145 and reiterated a buy rating, thefly reported.
The firm said Dell posted a solid quarter, but noted the shares may trade lower in the near term given mixed results. Still, UBS believes Dell’s AI order momentum is strong enough to support the stock.
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Bank of America analyst Wamsi Mohan raised Dell's stock price target to $167 from $165 with a buy rating.
The analyst said second-quarter results and FY25 guidance reinforced confidence that Dell can continue to drive upside to AI server revenue estimates.
Raymond James also raised its price target on Dell to $152 from $150 and reiterated an outperform rating.
The firm said it was “surprised” to see the stock indicated lower but expects shares to recover “once investors absorb all the moving pieces.”
Dell stock closed at $122.15 on Aug. 29.
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