PC & AI Server Business Backs DELL Earnings, NVDA Partnership's Potential

Core Viewpoint - Dell is set to report earnings, with analysts expecting adjusted EPS of $3.54 and revenue of nearly $32 billion for the quarter, while shares have declined over 25% from their 52-week high [1][3]. Business Segments - Dell's business is divided into two main parts: the infrastructure segment, which is experiencing strong demand for AI servers and has a growing backlog, and the PC segment, which is facing challenges due to rising costs for data storage and memory [3][5]. - The infrastructure business is performing well, particularly due to partnerships with Nvidia, which target customers in the AI server space [3][9]. Cost Challenges - The cost of memory is expected to double sequentially, significantly impacting the bill of materials for PC production, which poses a challenge for Dell and other PC manufacturers [6][4]. - Dell will need to work closely with suppliers and implement cost-cutting measures to mitigate these challenges, while also considering price adjustments [5][6]. Market Position - Dell is the third-largest PC maker globally and the second-largest in the U.S., but it faces competition from other major players like Lenovo and HP, who are also dealing with increased costs [3][4]. - Despite the challenges in the PC market, Dell's integrated offerings in AI servers and storage solutions position it well for future growth [8][9]. Investment Outlook - Analysts maintain a buy rating on Dell with a price target of $200, citing the company's strong infrastructure business as a buffer against the downturn in the PC segment [7][8]. - The stock is currently trading at a lower price-to-earnings ratio compared to historical averages, suggesting potential for recovery as the company navigates its challenges [11].