Dell Technologies stock remained near record-high territory on Monday, following the company's upbeat fiscal fourth-quarter earnings report last week. Dell stock rocketed over 31% Friday on the news.
The Round Rock, Texas-based company late Thursday beat Wall Street's targets for its fiscal Q4 that ended Feb. 2. Dell earned an adjusted $2.20 a share on sales of $22.32 billion. Analysts polled by FactSet had expected adjusted earnings of $1.73 a share on sales of $22.17 billion. On a year-over-year basis, Dell's earnings jumped 22% while sales dipped 11%.
Robust sales of data center servers for generative artificial intelligence applications helped to offset soft PC sales in the period.
"Our strong AI-optimized server momentum continues, with orders increasing nearly 40% sequentially and backlog nearly doubling, exiting our fiscal year at $2.9 billion," Chief Operating Officer Jeff Clarke said in a news release.
Dell Stock Dips To Start Week
"We've just started to touch the AI opportunities ahead of us, and we believe Dell is uniquely positioned with our broad portfolio to help customers build GenAI solutions that meet performance, cost and security requirements," Clarke added.
Also, Dell raised its annual cash dividend by 20% to $1.78 per common share. The first quarterly distribution of 44.5 cents per common share will be paid on May 3 to shareholders of record as of April 23.
On Friday, Dell stock surged to a record high of 131.06 in intraday trading. It ended the regular session up 31.6% to 124.59.
On the stock market today, Dell stock retreated 2.3% to close at 121.78.
Dell's AI Story Is Just Beginning
In a client note, UBS analyst David Vogt said Dell's AI server strength should support a richer valuation for Dell stock. He rates Dell shares as buy.
Meanwhile, Barclays analyst Tim Long reiterated his underweight rating on Dell stock. In a client note, he said growth in Dell's AI server business is not enough to make up for weak sales of PCs and legacy server and storage gear.
Dell's AI server business accounted for 3.6% of company revenue in the fourth quarter and is estimated to be 6% in the current fiscal year, Long said.
"We think Dell has done a good job winning AI server business, but see some of that as cannibalistic and still a year or two away from being large enough to matter," Long said.
Morgan Stanley analyst Erik Woodring calls Dell stock a "top pick." He rates it as overweight with a price target of 128.
"Dell's AI story is early days and gaining momentum," Woodring said in a client note.
Dell stock ranks second behind Super Micro Computer in IBD's computer hardware industry group, according to IBD Stock Checkup. That group ranks first out of 197 industry groups that IBD tracks. Dell stock has an IBD Composite Rating of 92 out of 99.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
