Dell stock soars on earnings beat as company navigates memory shortage

Dell reported adjusted earnings of $3.89 per share, exceeding the $3.53 per share expected by analysts surveyed by LSEG. The company reported $33.38 billion in revenue for the quarter, topping a forecast of $31.73 billion.

The company estimates fiscal 2027 revenue will come in between $138 billion and $142 billion, blowing away the $124.7 billion expected by Factset.

Dell expects revenue for its artificial intelligence servers to hit $50 billion in 2027, over double the year prior.

With memory chip makers prioritizing the high-bandwidth memory needed for AI chips made by companies including Nvidia, AMD and Google, it has meant less supply for the makers of laptops and smartphones.

Dell started to increase prices for its PCs last year to manage surging costs and CFO David Kennedy said on the earnings call that the company has priced to “offset” the pressure from those costs.

“Customers are assessing their needs and priorities in an environment where component demand is outpacing supply, which is elevating input costs and extending lead times,” Kennedy said.

But analysts have raised concerns about those price hikes weighing on demand moving forward.

“While the near term is clearly strong, we are unsure of the demand elasticity created by the swift and significant price actions taken by Dell,” Bank of America analyst Wamsi Mohan wrote in a note Thursday.

The bank reiterated its buy rating on the stock and upped its price objective from $135 to $155.