The Morning Trade: DELL

Core Viewpoint - Dell has raised its fourth quarter and annual revenue guidance, driven by strong demand in its AI business, leading to a significant increase in its stock price [1][5][19]. Financial Performance - Dell reported record-breaking third quarter revenue of $27 billion, an 11% increase year-over-year, which was in line with expectations [4][5]. - The company exceeded earnings per share (EPS) expectations, reporting $2.59 compared to the anticipated $2.48 [5]. - Gross margins were reported at 21.1%, surpassing analyst estimates despite rising component costs [6][11]. Market Reaction - Following the earnings report, Dell's shares rose over 4.5%, reflecting investor optimism regarding the raised revenue guidance and strong AI demand [4][5][22]. - Analysts have shown a generally positive sentiment, with several firms adjusting their price targets upward, indicating confidence in Dell's future performance [7][8][10]. Future Outlook - Dell projects $25 billion in AI server sales for fiscal 2026, representing over 150% growth from previous estimates [5]. - Analysts expect long-term EPS growth of 15% over the next five years, aligning with the company's guidance [8]. - Despite some analysts lowering their price targets, the overall sentiment remains bullish due to strong AI demand and improved margins [10][11].