Dell Technologies (NYSE: DELL) has been in sizzling form on the stock market so far in 2024, rising an impressive 76% as of this writing. This occurred thanks to a turnaround in the company's fortunes due to the growing demand for its server solutions used for mounting artificial intelligence (AI) chips.
The stock's 2024 rally will be put to the test when Dell releases its fiscal 2025 third-quarter results on Tuesday, Nov. 26. Let's see what investors can expect from Dell when it releases its quarterly report, and check if its guidance is going to be solid enough to help it sustain its impressive rally.
When Dell released its fiscal 2025 second-quarter results in August, management pointed out that the company's growth is likely to pick up in the second half of the fiscal year. It guided for fiscal Q3 revenue of $24.5 billion at the midpoint of its guidance range, which would be a 10% jump from the same quarter last year.
Dell expects adjusted earnings to land at $2 per share at the midpoint. Consensus estimates compiled by Yahoo! Finance, however, are expecting Dell to deliver $2.04 per share in earnings on revenue of $24.7 billion. It won't be surprising to see the company beat Wall Street's increased expectations, thanks to the solid demand for its AI servers.
For instance, in fiscal Q2, Dell sold $3.2 billion worth of AI servers, as compared to $2.6 billion in Q1. A strong performance seems to be in the cards, once again, as the company finished Q2 with an AI server order backlog of $3.8 billion.
It also pointed out that it has a potential revenue pipeline that "has grown to several multiples of our backlog." If Dell manages to ship more AI servers on the back of an improved supply chain, there's a good chance it can post better-than-expected numbers.
Another factor that could play in Dell's favor involves the problems that its rival Super Micro Computer (NASDAQ: SMCI) is facing. Supermicro stock has plummeted on negative news, including accusations of accounting manipulation, the resignation of its auditor, and management's failure to file the annual report within the stipulated timeline.
It now appears that Supermicro's customers are shifting their orders away from the company. As reported by Tom's Hardware, Elon Musk's xAI has reportedly taken $6 billion worth of AI server orders elsewhere from Supermicro. The report adds that Dell could be one of the biggest beneficiaries of such a development as it's one of the largest server manufacturers in the world.