Key Takeaways
- Dell’s Q4 fiscal results arrive after Thursday’s market close on February 26
- Wall Street forecasts $3.53 earnings per share alongside $31.7 billion in revenue, representing 32% annual growth
- Server and networking segment projected to reach $14 billion, climbing from $6.63 billion year-over-year
- Memory component inflation threatens profitability; gross margins anticipated to decline to 20.3% from prior year’s 24.3%
- Competitor HP has already issued warnings about memory cost pressures extending into fiscal 2027
Dell Technologies approaches its quarterly financial disclosure riding significant artificial intelligence momentum — yet profitability challenges loom large.
The technology giant will unveil its fourth-quarter financial performance following Thursday’s trading session. Analyst projections center on adjusted earnings of $3.53 per share with revenues reaching $31.7 billion.
These figures represent substantial improvement from the comparable prior-year period, which delivered $2.68 per share and $23.9 billion in sales — marking approximately 32% revenue expansion.
The underlying narrative remains straightforward: enterprises continue aggressive investments in artificial intelligence infrastructure, with Dell supplying critical servers and networking equipment that enable these deployments.
The server and networking division alone is projected to generate $14 billion during this quarter. This figure represents more than 100% growth compared to the $6.63 billion Dell recorded in last year’s fourth quarter.
Evercore ISI’s Amit Daryanani maintains an Outperform rating on Dell alongside a $160 price objective. His Monday analysis suggested results should exceed consensus expectations, driven by robust short-term demand spanning both AI computing infrastructure and conventional hardware categories.
Shares concluded Wednesday’s session at $123.50, trading significantly beneath that analyst target.
The company enters earnings with a favorable historical pattern. Dell has surpassed earnings projections in 75% of quarters throughout the previous two years, per GuruFocus data.
The analyst community maintains a collective “Buy” recommendation, averaging $155.12 as the consensus price target.
Profitability Challenges Emerge
Demand strength isn’t the primary concern — escalating costs are. Memory component pricing continues climbing rapidly, fueled by AI-driven consumption outstripping available supply. This dynamic is compressing profitability margins throughout the hardware industry.
Dell’s fourth-quarter gross margin is forecast at 20.3%, representing a contraction from 24.3% during the equivalent period one year earlier.
For perspective, Dell’s third-quarter gross margins of 21.1% exceeded analyst expectations — demonstrating the company’s ability to navigate these cost pressures with some success thus far.
However, the directional trajectory remains unfavorable.
HP Inc. directly addressed this challenge on Tuesday, indicating fiscal year earnings will likely settle at the lower boundary of its guidance range. HP further cautioned that elevated memory pricing will persist throughout fiscal 2026 and extend into fiscal 2027.
Daryanani observed that while Dell will attempt to absorb portions of these cost increases internally, some transfer to customers appears inevitable.
He emphasized that once fourth-quarter results become public, investor focus will rapidly pivot toward whether Dell can preserve margin stability and sustain double-digit earnings growth rates moving forward.
Critical Analyst Focus Areas
Analysts have also highlighted concerns that PC and conventional server demand may have experienced forward pull in Q4. The hypothesis suggests purchasers accelerated orders to circumvent anticipated price escalations resulting from rising memory costs.
Should this 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 reasonable relative to its earnings expansion trajectory. GuruFocus’s GF Value calculation establishes fair value at $138.33, characterizing the stock as modestly undervalued at present price levels.
The equity carries a beta coefficient of 1.11, indicating slightly elevated volatility compared with broader market movements.
Dell’s fourth-quarter financial results will be released following Thursday’s market close on February 26.
