Dell Shares Slide Despite Record $60.9 Billion AI Orders
Dell Technologies reported record AI server orders and a $95 billion backlog, though shares fell following a Barclays downgrade over valuation concerns.
Shares of Dell Technologies experienced significant volatility in mid-October, falling nearly 7% on Thursday to $473.39 following a previous session decline of over 11%. The slide was triggered by a downgrade from Barclays, which questioned if recent revenue growth was driven by memory inflation rather than sustainable fundamentals and cited concerns over higher leverage from recent financing.
Despite the stock pressure, the company reported record AI server orders totaling $60.9 billion in its fiscal second quarter, ending the period with a $95 billion backlog. Dell is guiding for $74 billion in AI server revenue, a 200% increase, and expects AI to constitute 75% of all data center demand by 2030. Financial performance remains strong with five consecutive quarters of earnings-per-share beats, most recently posting $7.04 against a $4.8994 estimate.
Operational challenges include tight DRAM and NAND supply and a 47% decline in free cash flow to $986 million last quarter. However, the company returned a record $4.3 billion to shareholders in the second quarter. Long-term growth strategies include new infrastructure partnerships with Honeywell and Accenture, while the company's stock has risen 313% year-to-date to $514.66.
