FTSE 100 today: Index rises, GBP flat; Mitchells & Butlers jumps, Whitbread falls
Investing.com - Shares of Dell Technologies rallied by more than 4% in premarket U.S. trading on Wednesday, fueled by a higher-than-expected current-quarter revenue and profit outlook.
Underpinned by soaring demand for its AI servers that are often equipped with Nvidia’s chips, Dell said it now expects to post fourth-quarter revenue of $31 billion to $32 billion, compared to LSEG estimates cited by Reuters of $27.59 billion. Adjusted income is also tipped to be $3.50, topping projections of $3.21.
Dell also raised its annual financial targets. Fiscal 2026 revenue is seen at $111.2 billion to $112.2 billion, versus a forecast of $105 billion to $109 billion previously. Its guidance for adjusted earnings per share was also lifted to $9.92. The company’s preliminary guidance for per-share profit growth of 15% or more was also "well ahead of Wall Street" expectations, analysts at Morgan Stanley said.
Speaking in a post-results call, Chief Operating Officer Jeff Clarke added that Dell would "do everything" it can to mitigate price increases following a jump in production costs. Investors have raised worries that the company’s margins could come under pressure from these expenses, as well as from intensifying competition from rival server makers like Super Micro Computer.
"Management acknowledged the memory cycle is unprecedented, but also spoke to better preparedness," the Morgan Stanley analysts said in a note. "We don’t doubt Dell will manage this cycle better than peers, but we still believe growth and/or margins will be impacted."
Still, Dell, whose varied customer portfolio ranges from the U.S. Department of Energy to CoreWeave, predicted that AI server shipments would among to $25 billion in revenue in its fiscal 2026 -- up from a prior view of $20 billion.
In a note, analysts at BofA Securities said the returns "re-affirmed our confidence in Dell continuing to drive upside to AI server consensus revenue estimates, while also navigating a difficult commodity environment."
New orders powered a rise in third-quarter AI server backlog to $18.4 billion, as well. For the period, Dell reported adjusted earnings per share of $2.59 and revenue of $27 billion.
(Yasin Ebrahim contributed reporting.)