Dell Shares Fall Ahead of Q3 Earnings Yet Retail Sentiment Remains Unshaken As Message Activity Peaks

Shares of Dell Technologies Inc. ($DELL) dropped more than 1% in mid-day trading on Tuesday as investors awaited the company’s third-quarter earnings report.

Wall Street expects Dell to report earnings of $2.06 per share on revenue of $24.67 billion.

Evercore ISI believes Dell will likely exceed revenue and earnings estimates, driven by strong performance in its Infrastructure Solutions Group (ISG), particularly in storage, general-purpose computing, and AI servers. 

However, weaker results in the Client Solutions Group (CSG) could partially offset this strength.

Despite concerns in the PC segment, Evercore expects investors will overlook these challenges if ISG margins continue to improve and demand for AI servers grows. 

The brokerage maintains an ‘Outperform’ rating and a $150 price target on Dell, adding the stock to its ‘Tactical Outperform’ list ahead of earnings.

On the other hand, Morgan Stanley expects year-over-year growth in Dell’s earnings but warns there may be limited upside to estimates.

The brokerage is cautious about analysts’ expectations for ISG margins stating, “Dell's October quarter ISG operating margins are expected to expand quarter-over-quarter, but at a more moderate pace of 70 basis points, compared to the 140 basis points that analysts are expecting,” 

Looking ahead, both expect Dell to benefit from an enterprise PC refresh in 2025. Key focus areas for investors will be Dell’s AI server backlog, pipeline, and demand, with improvements in the supply chain and better GPU availability from Nvidia Corp. ($NVDA) providing a boost.

“We believe Dell will be one of the key beneficiaries of enterprise PC refresh next year,” Morgan Stanley said in its note. 

Morgan Stanley estimates the AI server backlog will range between $3.5 billion to $4.5 billion, slightly higher than the previous quarter, suggesting that third-quarter AI server orders could fall between $2.6 billion to $3.6 billion, down from $3.2 billion in July. 

While optimistic about AI server growth in 2025, Morgan Stanley remains cautious about short-term expectations due to Nvidia’s product transitions and customer demand timing.

Dell Technologies Inc. Sentiment and Message Volume on Nov 26 as of 2:00 p.m. ET | Source: Stocktwits

Retail sentiment around the stock jumped into the ‘extremely bullish’ (85/100) zone with chatter surging to the ‘extremely high’ (79/100), marking a year-high for the stock. 

Retail investors on the platform are eyeing the earnings commentary for updates around NVIDIA as well as Super Micro Computers ($SMCI). 

Dell’s shares have surged nearly 90% so far this year, almost doubling in value.

For updates and corrections email newsroom[at]stocktwits[dot]com.<

Read also: Ford, General Motors, Stellantis Stocks Dip On Trump’s Tariff Threat To Mexico, Canada: Retail Saw It Coming