Dell Down Big in Pre-Market as Guidance Disappoints and Revenue Misses

Dell Technologies has reported a revenue increase for the third quarter of the fiscal year 2025 (Q3 FY25). The technology giant announced a 10% year-over-year (YoY) growth with a total revenue of $24.37 billion. While this marks substantial progress for the company, it represented a miss on what markets were expecting at $24.73 billion.

Despite the positive growth in several sectors, Dell's stock (NYSE: DELL) is down 11.63% in the pre-market session, with bullish momentum in the lead up to earnings clearly setting expectations higher.

The stock had rallied 17.47% over the past month, bringing the year-to-date gains up to an impressive 89.5%. After such a run up, it is no surprise to see markets harshly treating any minor miss, even with Dell's EPS coming in above estimates at $2.15 ($2.07 expected).

Another significant factor was the company's weaker-than-expected future guidance, along with challenges faced in other business segments.

Dell has adjusted its full-year revenue forecast for FY25. The revision stems from two primary issues. The first is the delayed availability of Nvidia’s Blackwell GB200 accelerators, and the second is the weakening demand in the PC market. Nevertheless, Dell ended the quarter on a strong financial footing, reporting $1.6 billion in cash flow from operations and a total of $6.6 billion in cash and investments.

The growth was largely fuelled by Dell's Infrastructure Solutions Group (ISG), which saw a record $11.4 billion in revenue, representing a 34% increase compared to the same quarter in the previous year. This division benefits particularly from the server and networking products, which are gaining momentum due to rising demand for AI-powered systems. Revenues from these products alone surged 58% YoY, reaching $7.4 billion.

The quarter was not without challenges outside the financial realm. In September, Dell suffered a data security setback when it faced a second data breach within a week. Hackers claimed to have accessed and released sensitive internal files through compromised tools provided by Atlassian.