Dell Technologies (NYSE: DELL) reported mixed results for its fiscal third quarter of 2025. Revenue rose 9.3% year-on-year to US$24.37 billion, but fell short of analysts’ consensus estimate of US$24.66 billion. Adjusted earnings per share (EPS) came to $2.15, beating expectations of $2.07.

Fueled by strong demand for AI servers, Infrastructure Solutions Group (ISG) delivered an outstanding performance, reporting a 34% increase in revenue to US$11.4 billion. Within ISG, server and networking revenue increased 58% to US$7.4 billion, highlighting Dell’s strength in meeting AI-related demands.

However, challenges emerged at Dell’s Client Solutions Group (CSG), where revenue fell 1% year over year to US$12.1 billion. Consumer revenue fell 18% to US$2 billion due to weak PC demand and increased competition.

Other businesses also contributed to the headwinds, with sales down 41% year-on-year to US$867 million, below analysts’ expectations.

reaction

Investors reacted sharply to Dell’s missed revenue and cautious fourth-quarter outlook, sending the stock plummeting 11% in after-hours trading. This was a clear reversal for the stock, which had risen 85% year-to-date through Tuesday’s close.

The stock is currently down 12.25% to $124.38.

Dell’s fourth-quarter revenue forecast was $24 billion to $25 billion, lower than Wall Street’s estimate of $25.57 billion. Similarly, the EPS estimate of $2.50 was below the consensus of $2.65.

“Dell continues to be a leader in AI infrastructure, but near-term weakness in the traditional PC sector and delays in AI server shipments are raising concerns,” Deutsche Bank analysts said. He said it was more a matter of timing than a long-term issue. .

Earnings calls

A post-earnings conference call highlighted the company’s strong performance in AI-driven markets and infrastructure.

COO Jeff Clark highlights growing momentum in AI servers as the company shipped $2.9 billion worth of goods in the third quarter and achieved more than 50% growth in the five-quarter pipeline I did. Clarke attributed this success to Dell’s engineering expertise and ability to deliver scalable solutions tailored to enterprise and Tier 2 cloud service providers.

But he warned that the trajectory of AI-related businesses will become “non-linear” as customers adapt to an evolving silicon roadmap.

Additionally, the company reported a steady increase in traditional servers due to data center modernization.

outlook

Despite the current headwinds, Dell executives remain optimistic about fiscal 2026. Clark suggested that the impending end of support for Windows 10 in 2025 and significant PC refresh cycles facilitated by advances in AI-enhanced PCs could be a tailwind.

Demand for AI servers is expected to accelerate as the traditional server market recovers.

Analysts are divided on the trajectory of the stock price. Some, like Deutsche Bank, see the stock decline as excessive, while others warn that Dell faces intense competition and unpredictable customer spending patterns in the AI ​​and PC markets.