Dell Posts Mixed Q1 Results But Offers Upbeat Outlook

Dell Technologies (DELL) reported fiscal Q1 adjusted EPS of $1.55, missing estimates of $1.70, but revenue of $23.38 billion beat expectations of $23.18 billion. The company's Q2 guidance significantly exceeded estimates, projecting adjusted EPS of $2.25 on revenue of $29 billion versus consensus of $2.11 and $25.33 billion, respectively, driven by strong AI server demand, with AI orders reaching $12.1 billion. Dell's stock rose over 2% in after-hours trading following the announcement, while HP (HPQ) shares declined after its earnings missed expectations due to tariff impacts.

Analysis

Dell Technologies reported a mixed fiscal first quarter, with adjusted earnings of $1.55 per share missing analyst expectations of $1.70, despite sales of $23.38 billion narrowly exceeding forecasts and representing a 5% year-over-year increase. However, the company issued significantly stronger-than-anticipated guidance for its fiscal second quarter, projecting adjusted earnings of $2.25 per share on $29 billion in sales, well above Wall Street's estimates of $2.11 and $25.33 billion respectively. This optimistic outlook, translating to guided 15% YoY earnings growth and 16% YoY revenue growth, is substantially fueled by "unprecedented demand" for its AI-optimized servers, which generated $12.1 billion in orders during Q1 alone and contributed to a $14.4 billion backlog; server and networking revenue hit a record $6.3 billion. Dell also raised its fiscal 2026 adjusted EPS forecast to $9.40. This positive trajectory for Dell, reflected in a post-earnings stock increase of over 2%, contrasts sharply with peer HP Inc., whose stock fell 8.3% after reporting an earnings miss attributed to tariff impacts and issuing guidance below expectations for the current quarter and full fiscal year.

Key Decisions for Investors

• Investors should consider the robust Q2 revenue and earnings guidance for Dell, alongside its $12.1 billion in Q1 AI server orders and $14.4 billion backlog, as strong indicators of near-term growth momentum that may outweigh the slight Q1 EPS miss.
• The significant outperformance of Dell's AI segment warrants close attention to its contribution to overall profitability and market share gains, especially as the company raised its FY26 EPS outlook.
• The contrasting results and guidance between Dell and HP, particularly HP's vulnerability to tariff costs, highlight the importance of assessing individual company exposure to specific growth drivers like AI versus broader macroeconomic headwinds within the tech hardware sector.