DELL Gears Up to Report Q4 Earnings: Buy, Sell, or Hold the Stock?

Core Insights - Dell Technologies (DELL) is set to report its fourth-quarter fiscal 2026 results on February 26, 2026, with expected revenues between $31 billion and $32 billion, indicating a year-over-year growth of approximately 32% [1][2] - The company anticipates non-GAAP earnings of $3.50 per share, reflecting a 31% increase year-over-year, with the Zacks Consensus Estimate for revenues at $31.91 billion and earnings at $3.54 per share, suggesting growth rates of 33.33% and 32.09% respectively [2][3] Revenue and Earnings Expectations - For fiscal 2026, revenues are projected to be between $111.2 billion and $112.2 billion, with a midpoint of $111.7 billion indicating a 17% year-over-year growth [3] - Non-GAAP earnings for fiscal 2026 are expected to be $9.92 per share, up 22% year-over-year, with the Zacks Consensus Estimate for revenues at $112.02 billion and earnings at $9.98 per share, suggesting growth rates of 17.22% and 22.60% respectively [3] Performance and Market Position - Dell Technologies has outperformed the Zacks Consensus Estimate in three of the last four quarters, with an average earnings surprise of 0.23% [4] - The company is experiencing robust demand for AI-optimized servers, driven by digital transformation and interest in generative AI applications, which is expected to positively impact its fiscal fourth-quarter results [5][20] Segment Growth - In the fiscal fourth quarter, Dell anticipates a combined growth of 34% for its Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG), with ISG expected to grow in the mid-sixties percentage range and CSG in the low to mid-single digits [6] - The Zacks Consensus Estimate for ISG revenues is pegged at $18.818 billion, indicating a 66% year-over-year growth, while CSG revenues are expected to be $12.618 billion, suggesting a 6.20% year-over-year growth [6] AI Server Demand - Dell Technologies has booked $12.3 billion in AI server orders in the third quarter of fiscal 2026, bringing year-to-date orders to $30 billion, with a record backlog of $18.4 billion in AI server orders [7][8] - The company expects to ship approximately $9.4 billion worth of AI servers in the fiscal fourth quarter of 2026, with total AI server shipments projected to reach $25 billion for fiscal 2026, representing a remarkable 150% year-over-year growth [8] Competitive Landscape - Despite strong demand for AI-optimized servers, Dell faces challenges from a tough macroeconomic environment, competition in the PC market from companies like HP and Lenovo, and declining consumer PC revenue [9][20] - The company is also contending with supply-chain costs and competitive pressures in the AI market, which are impacting profitability [9][20] Stock Performance - Over the past six months, Dell Technologies' shares have declined by 9%, underperforming the broader Zacks Computer & Technology sector, which returned 10.6% [10] - Dell's shares are trading at a significant discount, with a forward 12-month price-to-sales ratio of 0.62X compared to the sector's 6.48X, indicating a cheap valuation [14]