Dell And HP Shares Fall Amid Lowered Forecasts

Topline

Personal computer giants Dell Technologies and HP Inc. are forecasting lower-than-expected earnings for the current quarter, causing shares of both companies to decrease by around 12%, while pacing what would be HP’s worst day in more than three years.

Key Facts

Dell’s shares dropped to about $124 as of around 2 p.m. EST on Wednesday, the furthest dip for the company’s stock since a 17.8% decrease on May 30.

HP’s shares dipped to just over $34, putting the stock on track for its worst loss since March 2020, when shares fell by more than 14% in a single day.

Dell—whose fourth quarter began Nov. 2—expects revenue to fall between $24 billion and $25 billion with adjusted earnings of $2.50 per share, below the $25.5 billion in revenue and $2.65 per share in earnings projected by analysts, according to FactSet.

Meanwhile, HP projected earnings per share to fall between 70 cents and 76 cents for a first quarter that started Nov. 1, compared to the 85 cents per share projected by analysts.

The AI market is a “robust opportunity” for Dell with “no signs of slowing down,” Jeff Clarke, Dell’s COO, said in the company’s report, though he noted on Wednesday that Dell’s AI business “will not be linear” as customers navigate a “changing” market.

On Tuesday, Dell reported third-quarter earnings of $2.15 per share—beating analyst projections of $2.06—and revenue of $24.4 billion, falling just below estimates of $24.67 billion, according to FactSet.

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Big Number

89.5%. That’s how much Dell’s shares increased by this year before Wednesday. HP’s shares had increased by more than 31%.

Key Background

Traditional computer makers Dell and HP have had their stocks rise in value this year as AI-powered computers have yet to take hold of the market. Enrique Lores, HP’s CEO, suggested his company would benefit from Windows computers transitioning to an upgraded operating system, though that transition has been slower than anticipated and sales have plateaued, according to Reuters. Dell’s business has surged amid increased demand for AI, reporting $800 million in AI server sales and another $2.9 billion in order backlog in March, sending the company’s stock to a record high.

Forbes Valuation

Dell founder and CEO Michael Dell’s fortune was cut by about $7.1 billion Wednesday as shares in his company dropped. Dell is the 16th-richest person in the world with a net worth valued at $103.7 billion, according to our latest estimates.