Key Takeaways
- Dell Technologies reports fourth-quarter fiscal earnings Thursday, February 26, after market close
- Wall Street consensus calls for $3.53 adjusted EPS and $31.7 billion in revenue, representing 32% year-over-year growth
- Server and networking segment projected to reach $14 billion, more than doubling the prior year’s $6.63 billion
- Memory component inflation threatens to compress Q4 gross margins to 20.3% versus 24.3% in the year-ago period
- HP has already cautioned that elevated memory pricing will impact profitability through the end of fiscal 2027
Dell Technologies faces a paradox as it prepares to unveil fourth-quarter financial results: booming artificial intelligence demand is driving unprecedented revenue growth, yet rising component costs threaten to erode profitability.
The PC and enterprise hardware manufacturer will report its fiscal Q4 performance after Thursday’s closing bell. Consensus estimates from Wall Street analysts point to adjusted earnings per share of $3.53 alongside revenue totaling $31.7 billion.
Those figures would mark substantial improvement over the year-ago quarter, when Dell delivered $2.68 in EPS and $23.9 billion in sales—representing approximately 32% revenue expansion.
The fundamental narrative remains straightforward: enterprises worldwide are deploying significant capital toward AI infrastructure buildouts, creating robust demand for Dell’s server hardware and networking equipment.
Analysts project the company’s server and networking division will generate roughly $14 billion this quarter. That figure represents more than a 100% increase compared to the $6.63 billion recorded during the comparable period last year.
Evercore ISI’s Amit Daryanani maintains an Outperform rating on the stock with a $160 price objective. In a Monday research note, Daryanani indicated his expectation for above-consensus results, pointing to sustained momentum in both AI-focused compute infrastructure and conventional enterprise hardware.
Shares of Dell closed Wednesday’s session at $123.50, trading well beneath that analyst target.
Historically, the company has demonstrated reliable execution. Dell has surpassed earnings per share projections in 75% of quarters over the past 24 months, according to data from GuruFocus.
The analyst community maintains a “Buy” consensus rating, with the average price target sitting at $155.12.
Profitability Pressures Mount
The challenge facing Dell’s business isn’t on the demand side—it’s cost structure. Memory chip pricing has accelerated sharply higher as AI-driven consumption outstrips available supply. This dynamic is compressing profit margins throughout the computer hardware industry.
Analysts anticipate Dell’s fourth-quarter gross margin will land at 20.3%, a significant decline from the 24.3% achieved in last year’s corresponding quarter.
For perspective, the company’s third-quarter gross margin of 21.1% came in above Wall Street expectations—demonstrating Dell’s ability to navigate these cost headwinds with reasonable effectiveness thus far.
However, the directional trend remains concerning.
HP Inc. explicitly addressed this industry challenge on Tuesday, projecting that full-year earnings will settle toward the bottom of its previously issued guidance range. HP further warned that inflated memory component costs will persist throughout fiscal 2026 and into fiscal 2027.
Daryanani observed that while Dell will attempt to absorb portions of these increased costs through operational efficiency, some degree of price increases to customers appears unavoidable.
He emphasized that following the Q4 results release, investor focus will pivot rapidly toward whether the company can preserve margin stability and sustain double-digit earnings growth trajectories.
Critical Factors for Investors
Several analysts have highlighted the possibility that personal computer and traditional server demand experienced pull-forward effects during Q4. This theory suggests customers accelerated purchase decisions to circumvent anticipated price hikes stemming from memory cost inflation.
Should this scenario prove accurate, subsequent quarters could face more challenging year-over-year comparisons.
From a valuation perspective, Dell currently trades at a forward price-to-earnings ratio of 10.3, appearing relatively attractive given its growth profile. GuruFocus calculates a GF Value fair estimate of $138.33, categorizing the shares as modestly undervalued at present trading levels.
The equity carries a beta coefficient of 1.11, indicating slightly elevated volatility relative to broader market indices.
Dell Technologies will release its fourth-quarter financial results following Thursday’s market close on February 26.
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