Dell Leads AI Spike, SMCI Upgraded: Peak AI?




Since last Sept. 2023, Dell Technologies (DELL) traded at around $75. , when the desktop PC and server supplier posted results, DELL stock gained 31.6% on March 1, to $124.59. Unlike HP Inc. (HPQ), which posted weak PC and printer sales, Dell attributed its strong revenue to AI strength.

Dell rewarded shareholders by hiking its dividend by 20%, to $1.78 per share annually.

The firm posted a $2.20 EPS in the quarter on $22.32 billion in revenue. Chief Operating Officer Jeff Clarke said that Dell positioned itself well in AI. Cautious investors will notice that Dell’s revenue fell by 10.9% Y/Y. Yet the firm is projecting growth in the 3% to 4% range for fiscal 2025. The stock price tripled in only a year but growth by FY 2027 will only return to levels from FY 2023.

Dell’s strong quarterly results suggest that Super Micro Computer (SMCI) is a major competitor to contend with. Despite the risks for the firm, shares of SMCI will trend higher after the S&P 500 planned to add the company to the S&P 500 index. It will delete Whirlpool (WHR).

Investors cannot be assured of continued hardware sales momentum. Dell servers are not the main processing power for AI. Graphics chips from Nvidia (NVDA) do all the work. As long as NVDA stock is strong, AI companies are not yet trading at a peak.



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