Dell Technologies forecast fourth-quarter revenue and earnings below Wall Street expectations Tuesday, despite bullish commentary from the company on AI sales growth. The PC maker reported quarterly earnings Tuesday that beat analyst expectations for earnings per share but came up light on overall revenue.
Shares fell 10% in after-hours trading.
Here’s how Dell did for the fiscal third quarter versus LSEG consensus estimates for the quarter ending Nov. 1:
Earnings per share: $2.15 adjusted versus $2.06 expected
Revenue: $24.4 billion versus $24.67 billion expected
Net income climbed 12% to $1.12 billion, or $1.58 per share, from about $1 billion, or $1.36 per share, in the year-ago period. Overall revenue increased about 10% from $22.25 billion a year ago.
Dell said it expected between $24 billion and $25 billion in revenue during the fourth quarter, less than LSEG expectations of $25.57 billion. It said it expected $2.50 in adjusted earnings per share, versus expectations of $2.65 per share.
Chief Operating Officer Jeff Clark told investors on the earnings call that growth from AI will change from quarter to quarter.
“This business will not be linear, especially as customers navigate an underlying silicon roadmap that is changing,” Clark said.
The company’s shares have risen 86% so far in 2024 as investors realize it’s one of the most important companies selling tools and systems for artificial intelligence developers.
Dell is a top vendor for computer clusters required to develop and deploy artificial intelligence, especially computers based around Nvidia chips. It competes against other server makers such as Super Micro Computer and Hewlett Packard Enterprise, as well as manufacturers in Asia.
Demand for Nvidia’s AI accelerators remains high from cloud providers, enterprises, and government institutions, who often buy systems installed with tens of thousands of AI chips. Dell sells the completed systems.
This year, Nvidia CEO Jensen Huang gave Dell and its founder, Michael Dell, a shout-out as the company to contact to place orders for its new Blackwell AI chips.
Dell executives said some of the demand from its customers was shifting to later quarters, waiting for Nvidia’s next-generation Blackwell chips, which are in production now but have yet to ship to end-users in large quantities.
“We saw in Q3 a pretty rapid shift of the orders moving towards our Blackwell design,” Clark said.
Dell said much of its AI system growth was already reflected in a $4.5 billion pipeline of future orders.
“We’re only in the very early innings of enterprises learning how to deploy AI,” Clark said.
Dell’s AI server sales are reported in the company’s Infrastructure Solutions Group, which includes AI servers, storage, networking components, and traditional servers. The group’s revenue rose 34%, mostly driven by AI sales, to $11.4 billion.
The strongest part of Dell’s ISG business was its servers and networking subsidiary, which includes AI systems. Revenue rose 58% to $7.4 billion. Dell shipped $2.9 billion in AI servers during the quarter, and the company said during the quarter that customers had booked $3.6 billion of future AI server orders.
The company said increased AI server orders boosted demand by “double digits” for its traditional servers, which are less power-hungry and based around CPU chips from Intel or AMD, and can free up room or power inside data centers for companies investing heavily in AI infrastructure.
The company’s computer storage systems grew less strongly than servers, rising 4% to $4 billion. The overall ISG unit is more profitable, thanks to sales of pricier AI systems.
Dell’s Client Solutions Group, which sells PCs and laptops to consumers and enterprises, declined 1% on an annual basis to $12.1 billion.
While commercial clients buying PCs for their workforces rose 3% on an annual basis to $10.1 billion, the company’s sales from PCs to consumers fell 18% on an annual basis to $2 billion.
(L-R) Apple CEO Tim Cook, Vivek Ramaswamy and Secretary of Homeland Security Kristi Noem attend the inauguration ceremony before Donald Trump is sworn in as the 47th U.S. President in the U.S. Capitol Rotunda in Washington, D.C., on Jan. 20, 2025.
Saul Loeb | Afp | Getty Images
While the stock market broadly fared better on Monday than in the prior two trading days, Apple got hammered once again, losing 3.7%, as concerns mounted that the company will take a major hit from President Donald Trump’s tariffs.
The sell-off brings Apple’s three-day rout to 19%, a downdraft that has wiped out $638 billion in market cap.
Apple is one of the most exposed companies to a trade war, analyst say, due largely to its reliance on China, which is facing 54% tariffs. Although Apple has production in India, Vietnam and Thailand, those countries also face increased tariffs as part of Trump’s sweeping plan.
Among tech’s megacap companies, Apple is having the roughest stretch. On Monday, the only stocks to drop in that group of seven were Apple, Microsoft and Tesla.
The Nasdaq finished almost barely up on Monday after plummeting 10% last week, its worst performance in more than five years.
Analysts say Apple will likely either need to raise prices or eat additional tariff costs when the new duties come into effect. UBS analysts estimated on Monday that Apple’s highest-end iPhone could rise in price by about $350, or around 30%, from its current price of $1,199.
Barclays analyst Tim Long wrote that he expects Apple to raise prices, or the company could suffer as much as a 15% cut to earnings per share. Apple may also be able to rearrange its supply chain so that imports to the U.S. come from other countries with lower tariffs.
A customer checks Apple’s latest iPhone 16 Plus (right) and Apple’s latest iPhone 16 Pro Max (left) series displayed for sale at Master Arts Shop in Srinagar, Jammu and Kashmir, on Sept. 26, 2024.
Firdous Nazir | Nurphoto | Getty Images
President Donald Trump’s reciprocal tariffs could lead Apple to raise the price of the iPhone 16 Pro Max by as much as $350 in the U.S., UBS analysts estimated Monday.
The iPhone 16 Pro Max is Apple’s highest-end iPhone on the market, and currently retails for $1,199. UBS is predicting a nearly 30% increase in retail price for units that were manufactured in China.
Apple’s $999 phone, the iPhone 16 Pro, could see a smaller $120 price increase, if the company has it manufactured in India, the UBS analysts wrote.
Shares of Apple have plummeted 20% over the past three trading days, wiping out nearly $640 billion in market cap, on concern that Trump’s tariffs will force the company to raise prices just as consumers are losing buying power.
“Based on the checks we have done at a company level, there is a lot of uncertainty about how the increased cost sharing will be done with suppliers, the extent to which costs can be passed on to end-customers, and the duration of tariffs,” UBS analyst Sundeep Gantori wrote in the note.
Apple, which does the majority of its manufacturing in China, is one of the most exposed companies to a trade war. China has a potential incoming 54% tariff rate — before new increases were proposed Monday. Smaller tariffs were also placed on secondary production locations, such as India, Vietnam and Thailand.
JPMorgan Chase analysts predicted last week that Apple could raise its prices 6% across the world to offset the U.S. tariffs. Barclays analyst Tim Long wrote that he expects Apple to raise prices, or it could suffer as much as a 15% cut to earnings per share.
If Apple were to relocate iPhone production to the U.S. — a move that most supply chain experts say is impossible — Wedbush’s Dan Ives predicts an iPhone could cost $3,500.
Morgan Stanley analysts on Friday said Apple could absorb additional tariff costs of about $34 billion annually. They wrote that although Apple has diversified its production in recent years to additional countries — so-called friendshoring — those countries could also end up with tariffs, reducing Apple’s flexibility.
After last week’s “reciprocal tariff announcement, there becomes very little differentiation in friend shoring vs. manufacturing in China — if the product is not made in the US, it will be subject to a hefty import tariff,” Morgan Stanley wrote.
Last week, the firm estimated that Apple may raise its prices across its product lines in the U.S. by 17% to 18%. Apple could also get exemptions from the U.S. government for its products.
Kimbal Musk, co-founder of The Kitchen Community, speaks during the annual Milken Institute Global Conference in Beverly Hills, California, May 3, 2016.
Patrick T. Fallon | Bloomberg | Getty Images
Elon Musk’s younger brother, Kimbal, took to the social network X on Monday to lambaste President Donald Trump’s tariffs, calling them a “structural, permanent tax on the American consumer.” He also said Trump appears to be the “most high tax American President in generations.”
“Even if he is successful in bringing jobs on shore through the tariff tax, prices will remain high and the tax on consumption will remain the form of higher prices because we are simply not as good at making things,” Kimbal Musk wrote on X, one of the companies in his brother’s extensive portfolio.
The younger Musk owns a restaurant chain called The Kitchen, is a board member at Tesla and a former director at SpaceX and Chipotle. He has also co-founded and invested in other food and tech startups, including Square Roots, an indoor farming company, and Nova Sky Stories, a creator of drone light shows that he bought from Intel.
Elon Musk is a top advisor to Trump, overseeing the so-called Department of Government Efficiency, or DOGE, an effort to drastically cut federal spending, largely through layoffs, and consolidate or eliminate agencies and regulations. However, his relationship with some key figures in the Trump administration has been showing signs of strain in recent days as the president’s sweeping tariffs have led to a dramatic selloff in stocks, including for Tesla, which is down 42% this year and just wrapped up its worst quarter since 2022.
Over the weekend, Elon Musk took aim at Trump trade advisor Peter Navarro, disparaging his qualifications in a post on X.
“A PhD in Econ from Harvard is a bad thing, not a good thing,” Musk wrote, after Navarro told CNN on Saturday that “The market will find a bottom” and that the Dow will “hit 50,000 during Trump’s term.” It’s currently at about 38,200.
Musk also said that Navarro hasn’t built “sh—.” Navarro told CNBC on Monday that Musk is “not a car manufacturer” but rather a “car assembler,” dependent on parts from Japan, China and Taiwan.
Tesla was seeking a more moderate approach to trade and tariffs in a recent letter to the U.S. Trade Representative.
According to Federal Election Commission filings, Kimbal Musk this year has contributed funds to the Libertarian National Committee and Libertarian Party of Connecticut. In 2024, while his brother became the biggest financial backer and promoter of Trump, Kimbal donated to Unite America PAC, a group that markets itself as a “philanthropic venture fund that invests in nonpartisan election reform to foster a more representative and functional government.”
A representative for Kimbal Musk didn’t immediately respond to a request for comment.