Dell Technologies late Thursday matched Wall Street's earnings target for its fiscal first quarter on higher-than-expected sales. But Dell stock fell after the company offered disappointing guidance.
The Round Rock, Texas-based company earned an adjusted $1.27 a share on sales of $22.24 billion in the quarter ended May 3. Analysts polled by FactSet had expected earnings of $1.27 a share on sales of $21.69 billion. On a year-over-year basis, Dell earnings dropped 3% while sales rose 6%.
With its Q1 results, Dell returned to sales growth after six consecutive quarters of declines on a year-over-year basis.
Dell's Infrastructure Solutions Group reported $9.2 billion in sales, up 22% year over year. The group sells servers, storage and networking gear.
Meanwhile, the company's Client Solutions Group, which sells desktop and notebook PCs, posted sales of $12 billion, flat year over year.
Dell Stock Retreats From Record High
"We again demonstrated our ability to execute and deliver strong cash flow, with AI continuing to drive new growth," Chief Financial Officer Yvonne McGill said in a news release.
For the current quarter, Dell predicted adjusted earnings of $1.65 a share on sales of $24 billion. Analysts were looking for earnings of $1.88 a share on sales of $23.35 billion in the fiscal second quarter.
For the full fiscal year, Dell forecast adjusted earnings of $7.65 a share on sales of $95.5 billion. Wall Street was modeling earnings of $7.74 a share on sales of $94.64 billion.
In after-hours trading on the stock market today, Dell stock tumbled 17.6% to 140. During the regular session Thursday, Dell stock dropped 5.2% to close at 169.91.
Dell stock hit a record high of 179.70 on Wednesday after getting a price-target hike from BofA Securities. Dell is seen benefiting from the buildout of data centers for generative artificial intelligence applications, BofA analyst Wamsi Mohan said.
At its Dell Technologies World conference on May 20-23, the company introduced new AI PCs, AI servers, all-flash storage and network architecture. It also announced an expanded collaboration with AI chipmaker Nvidia.
Record Server Sales In First Quarter
Dell's better-than-predicted revenue was the result of record sales of servers and networking gear, Chief Operating Officer Jeff Clarke said in a statement.
"No company is better positioned than Dell to bring AI to the enterprise," Clarke said. The company's AI-optimized server orders increased sequentially to $2.6 billion and its backlog grew more than 30% to $3.8 billion, he said.
HP Beats Fiscal Q2 Estimates
Late Wednesday, industry peer HP topped analyst estimates for its fiscal second quarter ended April 30. It also guided above views for adjusted earnings in the full fiscal year.
The maker of PCs and printers earned an adjusted 82 cents a share on sales of $12.8 billion in fiscal Q2. Analysts had expected earnings of 81 cents a share on sales of $12.61 billion. On a year-over-year basis, HP earnings rose 4% while sales dipped nearly 1%.
HP now has posted eight straight quarters of declining sales.
On Thursday, HP stock broke out of a 46-week consolidation pattern at a buy point of 33.90, according to IBD MarketSurge charts. It ended the regular session up 17% to 38.36.
HP ranks fourth out of 15 stocks in IBD's computer hardware and peripherals industry group, according to IBD Stock Checkup. Meanwhile, Dell stock ranks third in the group.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
