Dell's earnings still aren't living up to AI expectations
Two weeks ago, I noted that an unexpected stock had matched Nvidia’s rocketship performance over the last year: Dell.
Dell appeared to be riding the AI wave, with its stock price jumping 11% on May 15 after Morgan Stanley raised its price target and predicted that Dell would benefit from more demand for its AI servers. However, that demand had not yet translated to Dell’s top line, with its revenue declining in a period when its market capitalization tripled.
Dell released Q1 earnings today, and it appears that investors are growing tired of waiting for Dell's financial performance to justify its valuation, with the stock falling as much as 15% after hours. Let's compare Dell's Q1 performance to Nvidia's numbers from a week ago:
Dell: Q1 revenue of $22.2B, up 6% from Q1 2024, and operating income of $920M down 14% from the same quarter last year.
Nvidia: Q1 revenue of $26B, up 262% from the year before (and 18% from the quarter before), and operating income of $16.9B, up 690% from the year before.
While Dell's management did note that servers and networking revenue, which includes the most AI-sensitive parts of its business, increased by 42% annually, the market reaction shows that this wasn't enough to impress investors.
Dell released Q1 earnings today, and it appears that investors are growing tired of waiting for Dell's financial performance to justify its valuation, with the stock falling as much as 15% after hours. Let's compare Dell's Q1 performance to Nvidia's numbers from a week ago:
Dell: Q1 revenue of $22.2B, up 6% from Q1 2024, and operating income of $920M down 14% from the same quarter last year.
Nvidia: Q1 revenue of $26B, up 262% from the year before (and 18% from the quarter before), and operating income of $16.9B, up 690% from the year before.
While Dell's management did note that servers and networking revenue, which includes the most AI-sensitive parts of its business, increased by 42% annually, the market reaction shows that this wasn't enough to impress investors.
