Dell Technologies(US:DELL) ZACKS·2024-12-02 15:25Core Viewpoint - Dell Technologies (DELL) shares have declined 9.9% following the release of its third-quarter fiscal 2024 results, despite year-over-year increases in earnings and revenues, primarily due to weak guidance stemming from ongoing demand challenges in the consumer PC market and a tough macroeconomic environment [1] Group 1: Financial Performance - DELL shares have returned 84.1% over the trailing 12 months, outperforming the Zacks Computer – Micro Computers industry's growth of 26.2% and the broader Zacks Computer & Technology sector's return of 35.7% [2] - The Zacks Consensus Estimate for DELL's fiscal 2025 earnings is $7.82 per share, reflecting a 9.68% year-over-year growth, while the estimate for fiscal 2026 is $9.61 per share, indicating a growth of 22.82% [10] Group 2: AI and Server Demand - Strong demand for AI servers, driven by digital transformation and interest in generative AI applications, has been a significant growth catalyst for DELL [2] - DELL's AI server pipeline grew 50% sequentially in the fiscal third quarter, with orders reaching $3.6 billion, primarily from Tier-2 cloud service providers [4][5] - The company shipped $2.9 billion worth of AI servers in the fiscal third quarter, with an AI server backlog of $4.5 billion at the end of the quarter [5] Group 3: Market Outlook - DELL anticipates strong top-line growth for the second half of fiscal 2025, driven by robust AI demand and an upcoming PC refresh cycle with new AI-powered PCs expected to boost revenues in fiscal 2026 [6][8] - The AI hardware and services market is projected to reach $174 billion by 2027, with a CAGR of over 22% from 2023 to 2027 [8] Group 4: Valuation and Trading Indicators - DELL shares are considered undervalued, with a Value Score of A and a forward 12-month P/E ratio of 13.69X, significantly lower than the sector's average of 26.53X [12] - DELL shares are trading above both the 50-day and 200-day moving averages, indicating a bullish trend [14]