Dell ‘Well Positioned’ on Earnings: Evercore By Investing.com

Dell Technologies (NYSE: ) looks “well positioned” ahead of its upcoming earnings report, according to analysts at Evercore ISI.

The firm said in a note Friday that it believes Dell will meet, if not beat, consensus estimates for the July quarter, which currently stands at $24.14 billion in revenue and $1.68 in EPS.

This optimism is driven by a stronger demand environment in Dell’s core businesses, including x86 servers, PCs and storage, with additional upside expected from AI server shipments.

Evercore believes a key focus for investors will be Dell Infrastructure Solutions Group’s (ISG) margins. Analysts at the firm noted that concerns about AI server margins have increased following the recent performance of Super Micro Computer’s ( SMCI ) margin.

However, Evercore believes Dell can counter that narrative by demonstrating that any margin weakness in the first quarter was due to issues in its storage business rather than dilution from AI servers.

Evercore ISI also flagged concerns over recent reports of layoffs at Dell, which followed a significant headcount reduction in February 2023.

“Shopping fears remain indexed by ISG’s weak margin performance and reports of sizeable layoffs,” Evercore wrote.

Despite these concerns, the firm remains confident that demand has improved in Dell’s core segments. Specifically, demand for x86 servers increased, driven by average selling prices (ASPs), PCs, driven by unit and storage growth, particularly in the flash segment.

“As demand remains structurally better from CY23 and ISG margins show sequential expansion through FY25, we believe investors will be more comfortable stepping in,” Evercore added.

The firm maintained its Outperform rating on Dell with a price target of $140.