Why Dell Technologies Stock Rallied Today
Key Points
Dell missed fiscal third-quarter revenue estimates, but issued better-than-expected guidance.
Record third-quarter server revenue soared 37%.
Dell expects full-year AI server shipments to be 150% higher year over year.
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Dell Technologies (NYSE: DELL) stock has been declining over the last month as investors have become skeptical of the artificial intelligence (AI) sector. The AI server provider mostly dispelled those fears with its earnings announcement last night, however.
Shares jumped in response. As of 11:25 a.m. ET, Dell stock had rallied 5.8% even after its fiscal 2026 third-quarter revenue slightly missed analyst estimates. That's because the current quarter's guidance shows that the AI business remains impressive.
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AI server orders are rocketing
The AI trade has stumbled lately over concerns that hyperscalers and others are overspending to quickly build AI infrastructure. Fears of a slowdown in growth may have been exaggerated, however. Even with today's jump higher, Dell stock is nearly 20% below its recent high.
Dell surprised investors with a highly profitable quarter, reporting earnings per share (EPS) of $2.59, which exceeded expectations of $2.47. It predicted even better comparable non-GAAP EPS of $3.50 for the current quarter at the midpoint of the guidance range.
Dell also increased its AI server shipment guidance by $5 billion to $25 billion for fiscal 2026. Chief operating officer Jeff Clarke stated, "Dell is winning in AI because of our unique ability to engineer bespoke high-performance solutions, rapidly deploy large, complex clusters, and provide global support."
Investors are now buying the dip after the stock's recent decline. It seems fears of slowing AI spending are premature, at least for now.
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Howard Smith has positions in Dell Technologies. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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