Dell’s AI Comments Support Multiple Holdings and Could Prompt This Move
Let's dig into Dell's quarterly results and comments, its big jump in backlog, and what could lead us to pick up more shares of this name.
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While the latest Fed Beige Book arrives at 2 PM ET this afternoon, a filing that should get more attention than not, the reality is Thanksgiving travel and preparation will likely mean fewer folks giving it the once-over. We will be among those reading the document, but candidly, we’ll get more out of sizing up its findings against the November-facing data we’ll get next week from ISM, ADP, Challenger Grey, and others.
Heading into the holiday, the market’s expectation for a December rate cut has continued to rebound, with the most recent CME FedWatch tool pegging those odds around 85%. The fuller data picture that will come next week will determine if the market is on the money or if it’s once again ahead of itself.
Before we get to the Fed Beige Book, the market on Wednesday looks to continue its upward movement of the last few days, being carried by Tuesday night’s wave of earnings reports. Among them was the stronger-than-expected outlook served up by Dell Technologies (DELL) .
Dell's results included a record quarter for AI server orders of $12.3 billion, which compares to the $5.6 billion booked in the prior quarter. Exiting the October quarter, Dell’s backlog stood at a record $18.4 billion compared to $11.7 billion at the end of July.
During the current quarter, Dell expects to ship ~$9.4 billion of AI servers compared to $5.6 billion in the October quarter. And while it declined to give any formal guidance beyond the current quarter, Dell management painted a favorable picture based on what it sees in its backlog and larger pipeline as well as customer discussions.
Those figures back the capital spending increases telegraphed by Big Tech as part of their September quarter results, as well as Nvidia’s (NVDA) outlook.
More AI servers being shipped means not only more chips being shipped, which is good for our shares of Nvidia and Marvell (MRVL) , but they also need to be connected. We see that as a positive for Arista Networks (ANET) , and that could lead us to pick up a few more of those shares later Wednesday morning.
In a follow-up Alert, we’ll discuss what we learned about the PC market from Dell and HP (HPQ) , and why those comments are supportive of another Pro Portfolio holding.
At the time of publication, TheStreet Pro Portfolio was long NVDA, MRVL and ANET.
