Dell Technologies (DELL) stock is trading down more than 20% Friday after the PC maker's appearance on the earnings calendar. While Dell exceeded top- and bottom-line expectations for its fiscal first quarter, it issued mixed guidance for its second quarter.
In the three months ended May 3, Dell's revenue increased 6% year-over-year to $22.2 billion, driven by a 42.4% jump in servers and networking revenue. The company said earnings per share (EPS) decreased 3% from the year-ago period to $1.27.
"We again demonstrated our ability to execute and deliver strong cash flow, with artificial intelligence (AI) continuing to drive new growth," Yvonne McGill, chief financial officer at Dell, said in a statement, adding that the company "generated $7.9 billion of cash flow from operations over the last 12 months."
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The results beat analysts' expectations. According to CNBC, Wall Street was anticipating revenue of $21.6 billion billion and earnings of $1.26 per share.
For its fiscal second quarter, Dell anticipates earnings of $1.65 per share and revenue in the range of $23.5 billion to $24.5 billion, the company said on its conference call.
However, the Q2 outlook came in mixed compared with analysts' expectations. According to Yahoo Finance, Wall Street is expecting revenue of $23.3 billion and earnings of $1.82 per share.
"No company is better positioned than Dell to bring AI to the enterprise," said Jeff Clarke, chief operating officer of Dell, in a statement.
Is Dell stock a buy, sell or hold?
The tech stock has posted an incredible performance so far in 2024, rising more than 70% for the year to date as of this writing, even when factoring in today's selloff.
Overall, analysts remain upbeat on Dell. According to S&P Global Market Intelligence, the consensus analyst target price for the AI stock is $153.01, representing implied upside of 14% to current levels. Meanwhile, the consensus recommendation is a Buy.
UBS Global Research is one of the more bullish outfits on Dell stock following the earnings release, with analyst David Vogt maintaining a Buy rating and raising his price target to $164 from $141.
The price-target hike is "driven by stronger and more durable revenue and profit growth than previously expected," Vogt wrote in a May 31 report. "While share price upside potential is more modest over the next 12 months relative to the past 12 months, we still view Dell as a secular winner in AI servers over the next several years."
UBS' new $164 price target represents implied upside of about 22% to current levels.
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