Shares of Dell Technologies (NYSE:DELL), which develops and sells computer and related products and technology solutions, jumped more than 19% in Thursday’s after-hours trading. Its better-than-expected Q4 performance and substantial artificial intelligence (AI)-driven opportunities led to a spike in its stock.
Dell also raised its annual dividend by 20% to $1.78 per share, representing a yield of about 1.9% based on its closing price of $94.66 on February 29.
Adding to the positives, the company’s leadership said it is well-positioned to capitalize on the AI opportunities with its industry-leading storage solutions. Further, the company plans to launch new products at its Dell Technology World event in May 2024 to seize AI opportunities.
Dell’s Q4 Results in Detail
Dell delivered revenue of $22.3 billion in Q4, down 11% year over year. The company said that enterprises and large customers remained cautious with their IT spending, which impacted its top-line growth rate. Nonetheless, its revenue came in higher than the Street’s forecast of $22.17 billion.
Despite lower year-over-year sales, Dell delivered adjusted earnings of $2.20 per share, up 22% year-over-year. Moreover, it exceeded analysts’ forecast of $1.73.
Strong AI Demand
Dell’s management said that they see solid momentum around AI. The company’s AI server orders increased nearly 40% sequentially in the fourth quarter. Moreover, it shipped $800 million of AI-optimized servers. In addition, its backlog almost doubled sequentially, ending Fiscal 2024 at $2.9 billion.
Dell Technologies expects Fiscal 2025 revenue to be between $91 billion and $95 billion. Adjusted EPS is predicted to be $7.50 (+/-$0.25). As for Q1 2025, it projects revenue to be $21 billion to $22 billion. EPS is forecasted to be $1.15 (+/- $0.10).
Is DELL Stock a Good Buy Now?
Wall Street analysts are bullish about Dell’s prospects. DELL stock has 12 Buy, one Hold, and one Sell recommendations for a Strong Buy consensus rating. Analysts’ average price target of $90.77 implies 4.11% downside potential.
The stock has gained over 140% in one year, which is why analysts’ price targets show downside potential.
Notably, price targets on DELL stock were set before its solid Q4 earnings release. This increases the probability that Dell stock might witness upward adjustments in price targets.
