DELL Set to Report Q1 Earnings: Buy, Sell or Hold the Stock?
Dell Technologies DELL is scheduled to report its first-quarter fiscal 2026 results on May 29.
For the first quarter of fiscal 2026, revenues are expected to be between $22.5 billion and $23.5 billion, with the mid-point of $23 billion suggesting 3% year-over-year growth. Non-GAAP earnings are expected to be $1.65 per share (+/- 10 cents), indicating 25% growth at the midpoint.
The Zacks Consensus Estimate for revenues is pegged at $23.10 billion, suggesting 3.86% growth from the figure reported in the year-ago quarter.
The consensus mark for quarterly earnings is pegged at $1.71 per share, up by 1.7% over the past 30 days, and suggesting year-over-year growth of 34.65%.
Dell Technologies' earnings beat the Zacks Consensus Estimate in all the trailing four quarters, with an earnings surprise of 5.13% on average. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Let's see how things have shaped up for DELL shares prior to this announcement.
Key Factors to Note for DELL
Dell Technologies' fiscal first-quarter results are expected to have benefited from the robust demand for AI-optimized servers, driven by ongoing digital transformation and heightened interest in generative AI applications.
Dell Technologies anticipates a 6% year-over-year revenue growth at the midpoint for the combined Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG) in the to-be-reported quarter. ISG revenues are expected to grow in the low teens, while CSG revenues are expected to be flat year over year.
The Zacks Consensus Estimate for DELL's first-quarter fiscal 2026 ISG revenues is currently pegged at $10.379 billion, indicating 11.2% year-over-year growth. The consensus mark for CSG is pegged at $12.237 billion, suggesting 2.25% year-over-year growth.
The growing AI market and Dell Technologies' leadership in AI-optimized servers, including the PowerEdge 9680, are expected to have been a tailwind in the to-be-reported quarter. In the fourth quarter of fiscal 2025, DELL's AI-optimized server momentum saw an increase of $1.7 billion in orders. The company shipped $2.1 billion worth of AI servers in the fiscal fourth quarter, and the AI server backlog remained healthy at $4.1 billion.
DELL Shares Outperform Sector
Year to date, Dell Technologies' shares have lost 2.7% against the broader Zacks Computer & Technology sector's return of 3.6%.
The outperformance can be attributed to DELL's expanding portfolio and rich partner base. However, the company's shares have declined due to increasing macroeconomic challenges and U.S. President Donald Trump's decision to impose tariffs on top trading partners, including China, Mexico and Canada, which has increased the chances of a trade war.
YTD Performance
Image Source: Zacks Investment Research
DELL Shares Trading Cheap
Dell Technologies shares are cheap, as suggested by a Value Score of B.
DELL stock is trading at a significant discount with a forward 12-month P/S of 0.75X compared with the Computer and Technology sector's 6.12X.
Price/Sales (F12M)
Image Source: Zacks Investment Research
DELL Benefits From Expanding Clientele
DELL's expanding partner base that includes the likes of NVIDIA NVDA, Worley, Microsoft, Meta Platforms META, Advanced Micro Devices AMD and Imbue is likely to have driven growth during the fiscal first quarter.
In May 2025, Dell Technologies announced major advancements across the Dell AI Factory with NVIDIA to accelerate enterprise AI adoption. These include next-generation PowerEdge servers, enhanced AI data platforms, integrated software solutions, and new managed services for streamlined AI deployment. Benefits from this partnership with NVIDIA are likely to have been reflected in the to-be-reported quarter's performance.
Dell Technologies collaborated with Meta Platforms to make it easy for its customers to deploy Meta Platforms' Llama 2 models on-premises with Dell Technologies' AI-optimized portfolio.
In February 2025, Dell Technologies expanded its AI for Telecom program through a collaboration with Advanced Micro Devices to develop AI solutions that enhance real-time telecom network monitoring and management using Dell PowerEdge XE7745 servers powered by Advanced Micro Devices EPYC processors.
What Should Investors Do With DELL Stock?
Despite DELL's robust portfolio and expanding partner base, the broader PC market recovery is slower than expected, with customers delaying purchases to evaluate AI-enabled PCs and prepare for the Windows 10 end-of-life.
A competitive pricing environment, especially in the Client Solutions Group (CSG) segment, has affected profitability. Cautious spending by enterprises and large customers on PCs and storage IT has been a concern for DELL's investors.
Increasing competition in the AI data center market, along with a higher mix of AI-optimized servers, is expected to hurt gross margin expansion in the to-be-reported quarter. Additionally, investor sentiment has also soured amid rising trade tension, with additional tariffs raising fears of escalating costs.
DELL currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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