Dell Technologies(US:DELL) ZACKS·2025-02-20 18:16Core Viewpoint - Dell Technologies is set to report its fourth-quarter fiscal 2025 results, with expectations of revenue growth and earnings performance amid challenges in the PC market and strong demand for AI servers [1][2][12]. Financial Performance Expectations - Dell anticipates fourth-quarter revenues between $24 billion and $25 billion, with a midpoint of $24.5 billion, indicating a 10% growth year-over-year [2]. - Earnings per share are expected to be around $2.50, with a slight variation of +/- 10 cents, while the Zacks Consensus Estimate for revenues is $24.66 billion, suggesting a 10.48% increase from the previous year [2][3]. - The consensus estimate for quarterly earnings is $2.53 per share, reflecting a year-over-year growth of 15% [3]. Recent Trends and Market Position - Dell's earnings have consistently exceeded the Zacks Consensus Estimate in the past four quarters, with an average earnings surprise of 10.44% [4]. - The company has faced sluggish PC shipments in the consumer segment, which have negatively impacted top-line growth due to ongoing consumer demand challenges and competitive pressures [5]. - According to Gartner, Dell experienced a 0.1% year-over-year decline in worldwide PC shipments in Q4 2024, with a market share decrease of 20 basis points to 15.5% [6]. Segment Performance - Dell expects a 13% year-over-year revenue growth at the midpoint for its combined Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG) [7]. - ISG revenues are projected to increase in the mid-twenties percentage range, while CSG revenues are expected to grow in low single digits year-over-year [7]. - The Zacks Consensus Estimate for ISG revenues is $11.713 billion, indicating a 25.5% year-over-year growth, while CSG is pegged at $12.074 billion, suggesting a 3.1% growth [8]. AI Demand and Future Outlook - Strong demand for AI servers is seen as a key growth driver, with Dell shipping $2.9 billion of AI servers in Q3 2025 and having a backlog of $4.5 billion [12]. - The Dell AI Factory, which integrates solutions optimized for AI workloads, is expected to support long-term growth targets [13]. - Dell anticipates revenue growth between 3% and 4% and earnings growth of more than 8% during the 2024-2028 period, with plans to return over 80% of adjusted free cash flow to shareholders [14]. Stock Performance and Valuation - Year-to-date, Dell's shares have declined by 0.7%, underperforming the broader Zacks Computer & Technology sector, which has returned 2.1% [9]. - The stock is considered overvalued, with a Value Score of C [11]. - Technical indicators show that Dell shares are trading below the 200-day moving average, suggesting a bearish trend [15][16].