Dell Expected to Report Strong Revenue Growth, But AI Server Sales Face Near-Term Pressure
Dell Technologies (NYSE: DELL) is set to announce its fiscal 2025 fourth-quarter earnings after the market closes on Thursday, with analysts predicting solid year-over-year revenue growth driven by the company’s Infrastructure Solutions Group, which includes servers and networking solutions.
Despite strong demand, some analysts remain cautious about Dell’s AI server revenue, citing supply-chain issues with Nvidia’s (NASDAQ: NVDA) Blackwell chips as a potential short-term obstacle.
Wall Street’s Expectations for Dell’s Q4 Results
According to analysts tracked by Visible Alpha, Dell is projected to report:
- Revenue: $24.56 billion (up from $22.32 billion a year ago)
- Adjusted Earnings Per Share (EPS): $2.51 (vs. $2.20 last year)
- Infrastructure Solutions Group Revenue: $11.74 billion (up over 25% YoY)
The company’s Infrastructure Solutions Group, which provides high-performance computing and AI-driven solutions, is expected to post record-breaking quarterly sales, reinforcing Dell’s expanding role in the AI and data center space.
Analyst Sentiment: Bullish Long-Term, Near-Term Uncertainty
Of the seven analysts covering Dell, six have “buy” or equivalent ratings, while one rates the stock as a “hold.” Their consensus price target of nearly $148 per share suggests an upside potential of around 30% from Monday’s closing price.
However, some analysts have recently lowered their price targets due to supply-chain constraints and short-term demand fluctuations:
- Bank of America (BofA) revised its price target to $150 from $155, maintaining a “buy” rating. The bank noted that AI server revenue could decline sequentially due to supply shortages of Nvidia’s Blackwell chips but expects Dell’s AI order growth to remain strong.
- Morgan Stanley cut its price target to $128 from $154, calling Dell’s short-term outlook “choppy” despite robust long-term AI demand.
AI Server Sales: Key Growth Driver or Near-Term Headwind?
Dell has aggressively expanded its AI-focused server business, a move that has positioned it as a key player in the global AI infrastructure market. The company is reportedly close to finalizing a deal to sell over $5 billion worth of servers powered by Nvidia GB200 chips to Elon Musk’s AI startup, xAI.
Despite these positive developments, short-term supply-chain bottlenecks could impact Dell’s AI-driven revenue growth in the upcoming quarters. However, analysts believe that Dell’s long-term AI expansion strategy remains intact, given its deep relationships with enterprise customers, cloud providers, and AI startups.
Stock Performance: Strong 12-Month Gains Despite Recent Pullback
Dell shares fell about 3% on Monday but have gained over 23% in the past year, reflecting investor confidence in the company’s AI-driven transformation.
As AI adoption accelerates across industries, Dell’s server and cloud businesses are expected to drive significant revenue growth in the coming years, despite short-term supply challenges.
Final Thoughts: Dell’s AI Future Remains Promising
Investors will be closely watching Dell’s earnings call for insights into:
- AI Server Demand: How is Dell managing supply-chain challenges, and what is the outlook for AI server shipments in 2025?
- Enterprise IT Spending: Are enterprises increasing or delaying investments in AI and cloud solutions?
- Nvidia Partnership: How will supply-chain constraints impact Dell’s partnership with Nvidia and its AI server revenue?
- Bank of America (BofA) revised its price target to $150 from $155, maintaining a “buy” rating. The bank noted that AI server revenue could decline sequentially due to supply shortages of Nvidia’s Blackwell chips but expects Dell’s AI order growth to remain strong.
While short-term volatility remains, Dell’s long-term AI strategy and data center expansion continue to make it an attractive technology stock for investors looking to capitalize on the AI revolution.
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