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Will Nvidia Partnership Give Dell Technologies Q2 Earnings a Boost?
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Many eyes are on Dell Technologies (DELL - Free Report) stock this week with the technology solutions provider set to report its second-quarter results on Thursday, August 31.
The increased attention is attributed to Dell’s partnership with Nvidia (NVDA - Free Report) on their joint artificial intelligence venture Project Helix.
Investors are on edge for Dell’s report, after Nvidia posted very impressive Q2 results last Wednesday driven by surging demand for its AI chips.
All Eyes on Project Helix
Investors may be eying Dell’s stock as a cheaper alternative for exposure to Nvidia’s success and the broader AI boom. Partnered with Nvidia, Dell launched Project Helix back in May as a service to help businesses use breakthrough generative AI.
The goal is to allow enterprises to boost productivity and unlock data value that accelerates their business from decision-making to digital transformation. Nvidia’s H100 GPU chips are being used to assist with simplifying and accelerating the generative AI deployment.
This has quietly put Dell at the center of the AI conversation with DELL shares rising +40% this year and Nvidia’s stock skyrocketing +234% to outperform the broader indexes.
Image Source: Zacks Investment Research
Q2 Preview
Wall Street will certainly be scoping Dell’s Q2 results and guidance, particularly on its outlook for Project Helix. Notably, Dell is up against a tougher to compete against quarter with Q2 earnings expected to fall -33% at $1.13 a share compared to $1.68 per share a year ago.
On the top line, Q2 sales are expected to dip -21% to $20.78 billion versus $26.43 billion in the prior-year quarter. Still, Dell has surpassed earnings expectations for five consecutive quarters most recently beating the Zacks Consensus for Q1 EPS by 50% in June.
Image Source: Zacks Investment Research
EPS Outlook
As alluded to in the expected quarterly decline in Q2 earnings, Dell had a strong fiscal 2023 with EPS at $7.61. Annual earnings are forecasted to be down -27% in Dell’s current FY24 to $5.56 per share. However, FY25 earnings are projected to stabilize and rebound 10% to $6.13 a share.
Image Source: Zacks Investment Research
Investors are hoping better-than-expected Q2 results will lead to analysts raising their earnings outlook for Dell, similar to its AI partner Nvidia.
According to Zacks estimates, Nvidia’s earnings are now anticipated to skyrocket 213% in its current FY24 at $10.46 per share compared to $3.34 a share in FY23. Plus, FY25 earnings are expected to climb another 48% to $15.48 per share.
Image Source: Zacks Investment Research
Takeaway
Going into its much anticipated Q2 report Dell’s stock lands a Zacks Rank #3 (Hold). There is still much to be seen on Dell's ability to profit from the AI revolution like Nvidia which stock currently sports a Zacks Rank #1 (Strong Buy).
With that being said, Nvidia’s strong Q2 results last week are reason to be optimistic about Dell stock as well and holding on to DELL shares could be rewarding.
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Will Nvidia Partnership Give Dell Technologies Q2 Earnings a Boost?
Many eyes are on Dell Technologies (DELL - Free Report) stock this week with the technology solutions provider set to report its second-quarter results on Thursday, August 31.
The increased attention is attributed to Dell’s partnership with Nvidia (NVDA - Free Report) on their joint artificial intelligence venture Project Helix.
Investors are on edge for Dell’s report, after Nvidia posted very impressive Q2 results last Wednesday driven by surging demand for its AI chips.
All Eyes on Project Helix
Investors may be eying Dell’s stock as a cheaper alternative for exposure to Nvidia’s success and the broader AI boom. Partnered with Nvidia, Dell launched Project Helix back in May as a service to help businesses use breakthrough generative AI.
The goal is to allow enterprises to boost productivity and unlock data value that accelerates their business from decision-making to digital transformation. Nvidia’s H100 GPU chips are being used to assist with simplifying and accelerating the generative AI deployment.
This has quietly put Dell at the center of the AI conversation with DELL shares rising +40% this year and Nvidia’s stock skyrocketing +234% to outperform the broader indexes.
Image Source: Zacks Investment Research
Q2 Preview
Wall Street will certainly be scoping Dell’s Q2 results and guidance, particularly on its outlook for Project Helix. Notably, Dell is up against a tougher to compete against quarter with Q2 earnings expected to fall -33% at $1.13 a share compared to $1.68 per share a year ago.
On the top line, Q2 sales are expected to dip -21% to $20.78 billion versus $26.43 billion in the prior-year quarter. Still, Dell has surpassed earnings expectations for five consecutive quarters most recently beating the Zacks Consensus for Q1 EPS by 50% in June.
Image Source: Zacks Investment Research
EPS Outlook
As alluded to in the expected quarterly decline in Q2 earnings, Dell had a strong fiscal 2023 with EPS at $7.61. Annual earnings are forecasted to be down -27% in Dell’s current FY24 to $5.56 per share. However, FY25 earnings are projected to stabilize and rebound 10% to $6.13 a share.
Image Source: Zacks Investment Research
Investors are hoping better-than-expected Q2 results will lead to analysts raising their earnings outlook for Dell, similar to its AI partner Nvidia.
According to Zacks estimates, Nvidia’s earnings are now anticipated to skyrocket 213% in its current FY24 at $10.46 per share compared to $3.34 a share in FY23. Plus, FY25 earnings are expected to climb another 48% to $15.48 per share.
Image Source: Zacks Investment Research
Takeaway
Going into its much anticipated Q2 report Dell’s stock lands a Zacks Rank #3 (Hold). There is still much to be seen on Dell's ability to profit from the AI revolution like Nvidia which stock currently sports a Zacks Rank #1 (Strong Buy).
With that being said, Nvidia’s strong Q2 results last week are reason to be optimistic about Dell stock as well and holding on to DELL shares could be rewarding.