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Dell Earnings, Outlook Were Fantastic. Why the Stock Is Down.

Hey friends,

Let’s talk about a situation that’s confusing a lot of people right now—Dell Technologies (DELL) had a strong earnings report, raised its future outlook, and is riding the AI wave… but the stock still dropped. How does that make sense?

Well, if you’re like me, you’ve probably learned that in the stock market, good news doesn’t always equal green candles. Let’s unpack what really happened and why this is actually a golden opportunity hiding in plain sight.

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Dell’s AI-Powered Momentum

First, let’s give credit where credit is due. Dell’s business is picking up steam, and AI is playing a major role.

In the first quarter of 2025, Dell brought in $23.4 billion in revenue—up 5% year-over-year. That beat Wall Street’s expectations. The big surprise? Dell is seeing huge demand for its AI-optimized servers.

Companies are ordering these machines like they’re going out of style. Dell said it now has $12.1 billion in backlogged AI server orders, which is massive.

If you’ve been following the AI trend, you’ll know how important this is. Everyone is racing to build data centers that can handle AI workloads. Dell is cashing in.

Dell’s Outlook Was Even Better

Not only did Dell do well last quarter, but they also gave us a better-than-expected forecast for the year ahead.

The company now expects $9.40 in adjusted earnings per share (EPS) for 2025. That’s up from their earlier estimate of $9.30.

They also raised revenue guidance, expecting demand to grow steadily—especially in AI infrastructure.

So, everything looks good, right?

Then Why Did the Stock Drop?

Here’s where things get interesting. Even though Dell crushed revenue and raised their outlook, their stock fell about 2% after the report.

Let’s break down why:

1. EPS Miss – Analysts were expecting $1.70 in EPS for the quarter. Dell delivered $1.55. That’s a miss. Investors don’t like surprises—especially on the downside.

2. Margin Pressure – Dell is spending a lot on research, development, and production. That’s good for the future but shrinks profit margins in the short term.

3. High Expectations – With all the hype around AI, investors were expecting blowout results. Even though Dell did well, it didn’t “wow” the market enough.

4. Profit-Taking – Dell stock has been up more than 100% over the past year. Some investors probably decided to lock in profits.

This is a great reminder that stocks are not always logical in the short term. The market runs on emotion, not just numbers.

The Bigger Picture Is Still Bullish

Here’s what I’m focusing on: Dell is positioned beautifully to benefit from the AI buildout.

Think about this:

• Dell makes servers for companies like Microsoft, Google, and Amazon.

• They’re rolling out new AI-optimized hardware faster than competitors.

• Their backlog of orders shows real demand.

Even though margins are under pressure now, that’s normal when a company is ramping up a new product line. Once production scales, costs go down and margins go back up.

This dip could actually be a buying opportunity.

Key Numbers I’m Watching

If you’re an investor, here are the metrics I’d keep on your radar:

1. AI Revenue Growth – Is Dell’s AI business growing quarter over quarter?

2. Order Backlog – Are customers still placing large future orders?

3. Gross Margins – Are costs getting under control?

4. Customer Mix – Is Dell getting more enterprise and cloud customers?

These numbers will tell us whether Dell’s AI business has staying power or is just a flash in the pan.

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Dell vs. The Competition

Right now, Nvidia and AMD are getting all the attention in the AI space. And rightly so—they make the high-performance chips everyone wants.

But here’s the thing: someone has to build the boxes those chips go into. That’s where Dell comes in.

Dell builds full server solutions with these chips inside. That means they don’t have to compete directly with Nvidia—they’re actually partners in many ways.

Plus, Dell has strong relationships with cloud providers and enterprise clients, giving it a solid moat.

Why Wall Street Analysts Are Still Bullish

Despite the dip, many analysts still love Dell.

• JPMorgan and Bank of America both reiterated their Buy ratings.

• Some analysts even raised their price targets.

• The AI growth potential is just too big to ignore.

As long as Dell continues executing on its AI strategy, the long-term story remains intact.

My Take for Newsletter Subscribers

If you’ve been riding the AI wave through Nvidia or Super Micro Computer, Dell might be your next hidden gem.

It’s not flashy, and it might not have that “cool” factor. But Dell is a workhorse—reliable, focused, and profitable.

The recent dip could be a chance to enter at a discount if you believe in the AI infrastructure story.

But remember: always do your own research. Use dollar-cost averaging if you’re nervous. And keep your eyes on the long game.

Final Takeaways

Stock drops like this are normal—especially when expectations are sky-high. What matters is not the market’s reaction today, but the company’s performance over the next 3–5 years.

Dell is investing heavily in the future of AI. They’re delivering solid revenue growth and attracting serious demand for their new hardware.

For patient investors, this could be one of those quiet compounders that builds real wealth over time.

As always, stay sharp, think long-term, and don’t let short-term noise shake you.

Until next time,

[Live Life Grow Wealth]

DISCLAIMER

I make no representations, warranties, or guarantees, whether expressed or implied, that the content provided is accurate, complete, or up-to-date. Past performance is not indicative nor a guarantee of future returns.

I am an individual content creator and not regulated or licensed by the Monetary Authority of Singapore (MAS) as I do not provide investment services.

All forms of investments carry risks, including the risk of losing your entire invested amount. Such activities may not be suitable for everyone. You are strongly encouraged to seek advice from a professional financial advisor if you have any doubts or concerns.