Dell Technologies (NYSE: $DELL), a leading American tech company that develops, sells, and supports PCs, servers, and data storage devices, released its Q4 fiscal 2025 results on Thursday after markets closed. The company’s shares sank after the results; let us take a closer look at them.
Dell Releases Q4 Results
In the fourth quarter of the fiscal year 2025, Dell reported revenue of $23.9 billion, a 7% YoY increase but below estimates of $24.55 billion. Fourth quarter adjusted EPS came in at $2.68, an 18% YoY increase, and above estimates of $2.53.
The company reported a non-GAAP net income of $2.7 billion, a 22% YoY increase, while net income came it at $1.53 billion, a 27% YoY increase.
Other Q4 Highlights
The Infrastructure Solutions Group (ISG) segment saw a 22% YoY increase in revenue to $11.4 billion, while the Client Solutions Group (CSG) reported a 1% YoY increase in revenue to $11.9 billion.
Q4 gross margin declined to 23.7% from 24.1% the previous year, while the operating profit margin increased to 9% from 6.9% the previous year.
Commenting on the results, Jeff Clarke, vice chairman and CFO of Dell Technologies said, “Our prospects for AI are strong, as we extend AI from the largest cloud service providers, into the enterprise at-scale, and out to the edge with the PC. The deals we’ve booked with xAI and others puts our AI server backlog at roughly $9 billion as of today.”
Full-Year Highlights
For the fiscal year 2025, Dell reported a revenue of $95.6 billion, an 8% YoY increase. Full-year non-GAAP operating income came in at $8.5 billion, an 8% YoY increase, while the full year adjusted EPS was up 10% YoY to $8.14. The company ended the fiscal year 2025 with $4.5 billion in cash flow from operations. Full-year net income increased 36% YoY to $4.58 billion.
The full-year gross margin declined to 22.2% from 23.8% the previous year, while the operating profit margin increased to 6.5% from 6.1% the previous year.
Capital Return
Dell announced an 18% increase to its annual dividend to $2.10 per common share. For the first quarter of fiscal year 2026, Dell announced a $0.525 dividend per common share. Additionally, the board approved a $10 billion increase to the existing share buyback program.
Dell Issues Q1 And Fiscal 2026 Guidance
The giant tech firm expects FY26 revenue of $101 billion to $105 billion, an 8% YoY increase at the $103 billion midpoint, which is in line with estimates of $103.17 billion. It expects an adjusted EPS of $9.30, a 14% YoY increase, which is above estimates of $9.23.
It expects revenue of $22.5 billion to $23.5 billion, a 3% YoY increase at the $23 billion midpoint, which is below the analysts’ estimate of $23.59 billion. Dell expects an adjusted EPS of $1.65, which is a 25% YoY increase, but below estimates of $1.76.
Earnings Call Highlights
Dell highlighted strong growth in AI-related orders in Q4. It fulfilled $1.7 billion in AI-related orders, with a $9 billion backlog. The company plans to expand its AI infrastructure solutions with the launch of new AI-optimized server platforms, cooling, and storage solutions. It also revealed that it had introduced Copilot+ to its PC lineup. Dell expects revenue and EPS growth to be above its long-term value framework. It also forecasts $15 billion in AI server shipments by fiscal year 2026.
DELL Market Performance
Following the mixed Q4 results, DELL shares sank 2.61% in premarket trading to $105.02 per share. Over the past six months, the shares have sunk 3.6%, while over the past year, DELL stock is up 17.77%. The stock is currently below both its 50 and 200-day moving averages of $113.11 and $123.10, respectively.
Should You Add DELL To Your Portfolio In 2025?
While Dell’s CSG saw growth of 1% YoY in Q4, and a 1% decline in fiscal 2025, the ISG segment saw revenue growth of 22% YoY in Q4, and a 29% YoY increase in FY25. This aligns with the massive increase in AI server demand, with Dell shifting its focus to AI infrastructure for future growth.
Despite the recent increase in AI usage, there is still a massive opportunity for growth, which should continue to produce growth for Dell in the medium term. With a forward price-to-earnings ratio of 11.60, DELL is cheap compared to the rest of the market; for instance, NVDA has a forward P/E of 28.09. Consequently, it could potentially be a great way to gain exposure to the budding AI industry.
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