Dell shares slip as AI server maker flags annual margin decline

February 28, 2025 09:45 PM AEDT | By Investing

Google News:

Dell shares slip as AI server maker flags annual margin decline

Recent News

Top Entertainment Options in Oahu, Honolulu, Waikiki: What Travelers N...

SYDNEY BASED CBD INSIGHTS LIFESTYLE MAGAZINE COMMENCE FEATURES ON CARP...

At London Climate Week, forestry companies launch Natural Capital Valu...

Apple internally weighs bid for ChatGPT rival Perplexity, Bloomberg sa...

Investing.com - Shares in Dell (NYSE:DELL) edged lower in premarket U.S. trading after the Texas-based group predicted that it would post a drop in adjusted gross margin in its 2026 fiscal year.

Weighed down by increasing costs associated with building out its AI servers, as well as tepid demand for its PCs, Dell said its full-year adjusted gross margin rate would fall by around 100 basis points.

Speaking to analysts, Chief Operating Officer Jeff Clarke also flagged that Dell is gauging the possible effect of U.S. President Donald Trump's tariff plans on input costs. Clarke noted that should these expenses rise, "it may require us to adjust prices."

Still, Dell forecast a 53% year-over-year jump in annual AI server shipments to $15 billion. The products, which feature Nvidia (NASDAQ:NVDA) chips and compete with servers from rival Super Micro Computer (NASDAQ:SMCI), can handle the massive amounts of computational demand needed to power and train AI models.

Dell’s margins and the impact of potential U.S. tariffs will “remain watchpoints” for investors, analysts at JPMorgan (NYSE:JPM) said.

For the fourth quarter, Dell reported adjusted earnings per diluted share (EPS) of $2.68 on revenue of $23.93 billion, compared with estimates for $2.53 per share and $24.56 billion, respectively.

The company also forecast current-quarter adjusted diluted per-share income of $1.65 and sales in a range of $22.5 billion and $23.5 billion, missing estimates for adjusted per-share profit of $1.83 and revenue of $23.72 billion.

Full-year 2026 adjusted diluted EPS was expected to be $9.30 on revenue between $101.0 billion and $105.0 billion, versus expectations of $9.29 and $103.62 billion.

Dell also increased its annual cash dividend by 18% to $2.10 per common share and announced a $10 billion jump in its stock buyback program.

"[T]here are a lot of puts-and-takes, but pluses [...] slightly outweigh minuses [...]," analysts at Vital Knowledge said in a note to clients.

(Yasin Ebrahim contributed reporting.)

This article first appeared in Investing.com

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (“Kalkine Media, we or us”), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary.
The content published on Kalkine Media also includes feeds sourced from third-party providers. Kalkine does not assert any ownership rights over the content provided by these third-party sources. The inclusion of such feeds on the Website is for informational purposes only. Kalkine does not guarantee the accuracy, completeness, or reliability of the content obtained from third-party feeds. Furthermore, Kalkine Media shall not be held liable for any errors, omissions, or inaccuracies in the content obtained from third-party feeds, nor for any damages or losses arising from the use of such content.
Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyrighted to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have made reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.
This disclaimer is subject to change without notice. Users are advised to review this disclaimer periodically for any updates or modifications.