Competitor Dell's stock dropped more than 10%! AI server performing well but PCs are a drag, will Blackwell's benefits expand in 2025?

Unimpressive short-term performance outlookmay be a drag on the stock price for a while. On the other hand, as shown from Dell's earnings callThe outlook for 2025 and beyond is positive.So, Recent events in the AI server market.With that in mind, the correction phase may be an opportunity to buy on dips.

Earnings Highlights
3Q results: AI servers performing well, but PC division is holding back.
◇In the 3rd quarter (August-October period), revenuerevenue was $24.4 billion, a 10% increase year-on-year, falling short of the market estimate of $24.6 billion.
◇Revenue from the infrastructure division including serversAt 11.37 billion dollars, the revenue increased by 34% compared to the same period last year, surpassing market expectations of 11.34 billion dollars, but the PC division fell by 1% to 12.13 billion dollars, below market expectations of 12.42 billion dollars.
◇3Q AI serversat 2.9 billion dollars Shipment and exceeded the market's expectations of 2.8 billion dollars.AI server order acquisitionreached a record high of 3.6 billion dollars, an 11% increase from the 2Q (May-July quarter).Order backlog increased from 3.8 billion dollars in 2Q to 4.5 billion dollars (18% increase).Order backlog increased from 3.8 billion dollars in 2Q to 4.5 billion dollars (18% increase).
◇Adjusted earnings per shareexceeded market expectations of $2.06 by reaching $2.15.

● 4Q revenue guidance falls below expectations
◇4Q (November-January period)Revenue guidanceis between $24 billion to $25 billion, below the market's expected $25.6 billion.
◇During the earnings call, the management team indicated that the recovery (replacement) of the PC market is expected to be delayed until 2025.Considering the performance in the third quarter and orders for AI servers,
◇it is expected that areas other than AI, such as PCs and storage, will continue to be sluggish.AI serverswill follow a subdued outlook.AI serversAlthough it is strong, it is not yet suggested to offset fields other than AI until early 2025.

Is the lackluster short-term outlook a weight on the stock price, while presenting a buying opportunity for the medium to long term?
Dell's stock price has risen nearly 60% since early August (86% year-to-date), potentially triggering profit-taking sales in line with the adage 'Sell on the news' from this earnings report. On the other hand, Unimpressive short-term performance outlookProfit-taking sell-offs may continue for a while. On the other hand, as indicated in Dell's earnings call,The outlook for 2025 and beyond is positive.So, Recent events in the AI server market.With that in mind, the correction phase may be an opportunity to buy on dips.

The recent two events in the AI server marketIt is considered important for Dell. Based on the following 1) and 2), Dell is expected to benefit from Blackwell's growth cycle in 2025.

1）Nvidia's latest AI semiconductor, Blackwell.It is expected to have a large shipment in 2025 for Blackwell, with demand for Blackwell being "crazy" (based on Nvidia's earnings reports). This is a favorable factor for Dell, which sells servers equipped with Nvidia's AI semiconductors.

At the same time, Dell is strengthening its partnership with nvidia in enterprise sales of AI servers. In this earnings call, Dell's managementbelieves that it is only in the very early stages that companies are beginning to explore how to introduce AI.and sees great business opportunities in the future.

Key comments from management at the earnings call.
◇PC DivisionFor the third consecutive quarter,Commercial PCsdemand continues to grow steadily. More corporate customers are starting to upgrade in a more price-competitive environment. There are signs of customers aligning upgrade cycles with new AI PCs.Consumerbusiness remained challenging in terms of demand and profitability, weaker than expected. The PC refresh cycle has been extended until next year. However, factors such as aging of the installed base, battery life, end of support for Windows 10, and hardware feature enhancements driven by AI are expected to provide significant tailwinds in the future.

◇AI serversmomentum continues, and the pipeline (backlog) significantly expanded in 3Q.Order acquisitionrevenue reached a record high of 3.6 billion dollars, an 11% increase from the previous quarter. This is mainly due toEnterprise customers and Tier 2 cloud service providers.（※）Continued increasereached 4.5 billion dollars. We continue to receive support from enterprise customers of all sizes, having acquired over 2,000 enterprise customers since the launch of AI servers.Order backlog increased from 3.8 billion dollars in 2Q to 4.5 billion dollars (18% increase).reached 4.5 billion dollars. We continue to receive support from enterprise customers of all sizes, having acquired over 2,000 enterprise customers since the launch of AI servers.enterprise customerswe have acquired over 2,000 enterprise customers.

◇Hopper(Nvidia's current AI semiconductor) is in production and is expected to continue production next year.Blackwellis expanding production and is expected to continue next year. Both architectures have.DemandThere is. Continuously seen from our order backlog. The 3Q ordersrapidly transitioned to Blackwell, that is, GB200. Specific proportions are not shown, but it accounts for a considerable portion. The design is completed, and Blackwell is in production with further expansion in production in the future. In other words, All is well prepared.Indeed.

◇Enterprisescontinue to grow. This is a continuedbig opportunity for us.Enterprises account for a significant portion of the backlog of orders.believes that it is only in the very early stages that companies are beginning to explore how to introduce AI.Companies understand that AI has significant disruptive power. AI brings innovation and productivity improvement. Companies are in the experimental stage, conducting advanced concept validations. As they transition through it, our (opportunities) are inestimable.The chances are immeasurable.。Considering our company's scale and track record of market introduction, I think there is an opportunity there.Considering our company's scale and track record of market introduction, I think there is an opportunity there.

◇Dell's CEO Jeff Clarke.said, AI is a significant opportunity for us..There are no signs of slowdown. uncomfortably close.

performance outlook
on a quarterly basisrevenue(Bloomberg calculation), Has been lackluster until 1Q of fiscal year 2026,However, With the expectation of recovery from 2Q onwards.It is expected that the contribution of AI servers, which management has identified as the main growth driver, will increase significantly in the future.Revenue from AI servers is included in the Infrastructure Solutions Group (ISG) division.The revenue of ISG division isFor the 4th quarter of the fiscal year ending January 26.1,CurrentIt is expected to exceed the PC division, the mainstay.Indeed.