Dell Soars on Q4 Earnings Beat, Robust AI Server Demand

On Friday, Dell Technologies had its best trading day since 2018 on better-than-expected fourth-quarter performance and AI server demand.

The Texas-headquartered tech company’s stock advanced 31.62% to $124.59 per share on March 01 following its latest earnings call. Furthermore, industry analysts anticipate a 0.86% climb to $125.66 apiece in the coming market session.

Dell posted adjusted Q4 earnings per share of $2.20 for the 2024 fiscal year, 27.17% above the $1.73 analyst projection. The figure marked a considerable 22.22% year-over-year (YoY) growth from the $1.80 EPS in the same quarter a year earlier.

Similarly, its November-January revenue of $22.32 billion topped the $22.17 billion market consensus by 0.68%. In contrast, the reading pointed to a % YoY contraction from the $25.00 billion revenue in Q4 2023.

In addition, the multinational corporation reported a 21.97% YoY increase in non-GAAP net income to $1.61 billion from $1.32 billion. Conversely, adjusted free cash flow narrowed by 55.51% to $1.01 billion in Q4 2024 from $2.27 billion in Q4 2023.

Market analysts reinstated Dell as a top stock pick on Friday, revising its 2024 price target from $100.00 to $128.00. They added that soaring orders, a massive backlog, and an expanding client base show the firm has found its place in the AI arms race.

AI Server Demand Positions Dell in the AI Race

While most major tech companies fixated on large language models and advanced AI chips, Dell focused on developing AI servers. It shipped $800.00 million in AI-optimized servers in the fourth quarter amid a 40.00% quarter-over-quarter increase in orders.

Likewise, the backlog for its server business nearly doubled, exiting the 2024 fiscal year at $2.90 billion. Demand for the segment continues to outpace the supply of AI GPUs, including the Nvidia H200 and the AMD MI300X.

Since the November 2022 release of ChatGPT, tech giants like Microsoft, Google, and Nvidia have been competing to advance GenAI technology to attract major clients. Meanwhile, Dell aims to use its AI server solutions to attract smaller enterprises just starting their AI journey.