How Did Every Analyst Miss Big on Dell?
Dell recently reported its earnings and absolutely shattered analysts’ expectations. Wall Street had revenue estimates of close to $35B and Dell produced $44B, EPS estimates were $2.94 a share but Dell came in at $4.86.
Morgan Stanley said “We got this one wrong, and our model/PT are under review.” JP Morgan and Piper Sandler ended up significantly raising their price targets, JP Morgan’s is now $500 from $280 and Piper Sandler’s is now $467 from $167.
Wall Street significantly underestimated Dell’s AI server business, generating $24.4B in new orders, giving the company an AI backlog of $51.3B. Dell even raised their revenue guidance to $167B from $140B.
If we take a look at the statistical side of Dell, there’s 21M shares short which is only about 7% of the float. This shows that Dell’s skyrocket day isn’t a short squeeze, so one can expect some profit taking in the near future.
From a company standpoint, Dell is in a fantastic growth position, it already announced a partnership with Nvidia to build an AI factory, and it also just closed a $10B defense deal with the U.S. government. The company is looking to expand its partnerships with other top technology companies in the future.
Analysts missed estimates on Dell, Intel, Nvidia, Corning, AMD, and Google, all big AI players. Is AI growing faster than they thought, or are they severely underestimating AI?
