Today, in our updated review (UPD 02/28), we’re once again discussing Dell. This tech giant is well known for its PCs and laptops, but that’s not all—it also specializes in servers and cloud solutions. At the beginning of 2025, Dell shares caught investors’ attention due to rumors of a potential contract with Elon Musk’s xAI. However, today, our focus is on Dell’s Q4 earnings report and Dell Stock Forecast.
DELL Q4 Earnings Results
Dell reported its Q4 earnings, with revenue totaling $23.9 billion, falling short of expectations of $24.55 billion. Earnings per share (EPS) came in at $2.68, surpassing the forecast of $2.53.
The main growth driver was AI servers. In 2024, sales reached $10 billion, and for 2025, Dell expects $15 billion. The Infrastructure Solutions segment grew by 22% to $11.35 billion, slightly below the projected $11.7 billion. The PC and laptop business saw a 5% revenue increase to $11.88 billion, also missing expectations of $11.98 billion.
Q1 2025 forecast: revenue is expected to be between $22.5 billion and $23.5 billion (below the anticipated $23.59 billion), with EPS projected at $1.65 (versus $1.76). For the full year 2025, Dell estimates revenue between $101 billion and $105 billion, with EPS at $9.30, slightly above expectations.
Additionally, Dell disclosed accounting errors related to supplier credits but stated that the financial impact was minimal. Overall, AI server demand continues to grow, with Dell maintaining a $4.1 billion backlog of orders.
Market Reaction to Dell’s Q4 Report
The mixed earnings report spooked investors, causing DELL stock to drop 5-6% on February 28. At the close of the first trading session after the Q4 report, the price stabilized around $100-101 per share. The decline is mainly due to concerns over weaker revenue guidance for the next fiscal year.
Personally, I sold Dell shares at $117 a few days before earnings, just like my NVIDIA shares. I’m trying to refine my investment strategy and avoid overvalued stocks.
Looking at current market capitalization, Dell is now valued at around $70 billion. The EPS stands at $6.38, confirming profitability despite market concerns.
Dell xAI Deal? $5 Billion AI Server Agreement in the Works
According to Bloomberg, Dell is reportedly in talks for a $5 billion deal with Elon Musk’s xAI. The company may supply servers equipped with Nvidia GB200 chips to support AI infrastructure. Dell has previously collaborated with xAI. In June 2024, Elon Musk confirmed that Dell and Super Micro would provide servers for xAI’s AI supercomputer.
In December 2024, Dell delivered tens of thousands of GPUs to the project. The demand for AI computing power continues to grow. Analysts estimate that in the 2024 fiscal year, Dell could have supplied over $10 billion worth of AI servers, with this figure potentially reaching $14 billion in 2025. However, the companies have not provided any official comments on the matter.
Why Is Dell a Good Stock to Buy Now?
Growth in the cloud and AI segment. The potential deal with xAI confirms that Dell holds a significant position in AI infrastructure. The company also collaborates with Microsoft (MSFT) and Amazon AWS (AMZN) in the cloud server market.
P/E ratio = 16. This can be considered a fair valuation compared to competitors in the tech sector. The average P/E ratio for the tech industry, especially AI and cloud solutions, is typically higher, ranging from 20 to 30+.
Dividend policy. In its Q4 report, the company announced a $10 billion stock buyback program and an 18% increase in annual dividends. Dell set the new dividend at $2.10 per share, with the first quarterly payment of $0.525 per share scheduled for May 2, 2025.
Possible Risks and Challenges
Impact of tariffs. This inevitably brings up former U.S. President Donald Trump. The U.S. is currently discussing new trade tariffs on Chinese goods, which could lead to higher technology costs. If Dell is unable to avoid tariff-related pressure, the company may have to raise prices.
Slowing growth. While AI server sales remain strong, investors are concerned about slowing growth in Dell’s core business segments and the company’s conservative outlook.
Overvaluation of the sector. The rapid rise of AI stocks may be overheating the market, potentially leading to a price correction.
Dell Stock Forecast
Analysts remain optimistic about Dell’s long-term growth. UBS advises investors to “buy on weakness”, noting that the lowered forecast was expected due to short-term market challenges. UBS reduced its price target from $158 to $150, but as of February 28, Dell shares are trading around $100–101, meaning that if the forecast holds, the potential upside could be nearly 50%.
JPMorgan analysts also reaffirmed their $150 price target, emphasizing that Dell remains one of the key beneficiaries of rising demand for AI infrastructure. They also highlighted that a recovery in the PC market and the emergence of AI-powered computers could further support Dell’s growth and stock performance in the coming months.
Is Dell a Good Stock to Buy Now?
From my perspective, Dell remains an interesting AI-sector stock. If the price drops further to $90-95 per share, I would consider buying. At the moment, my rating (Dell stock forecast) is approaching “Wait/Buy.”
One trading day isn’t enough to see the full picture. If Dell stock shows at least a slight recovery in early March, it could be a buying opportunity. However, if the correction continues, it’s better to observe and wait.
If you found this article useful, follow us on X (Twitter) for real-time market reactions to earnings reports and hot financial news. If you’re not into X, check out our analysis: Is Nvidia a Good Stock to Buy after Q4 Earnings? and Is HIMS a Good Stock to Buy after Q4 Earnings?
This article is for informational purposes only and does not constitute financial advice. The content reflects the author’s opinion and should not be interpreted as an investment recommendation.
