Dell Stock Under Pressure as AI Costs Weigh on MarginsShares of Dell Technologies (NYSE:DELL) slipped in premarket trading following the company’s latest earnings report, which signaled potential margin compression in its fiscal 2026 outlook. The decline comes despite robust AI server growth projections, highlighting a complex landscape of opportunities and challenges for the tech giant.
Margin Compression and Tariff Uncertainty Weigh on Sentiment
Dell's financial outlook raised investor concerns as the company forecasted a 100 basis-point decline in adjusted gross margins for fiscal year 2026. This pressure stems largely from rising costs associated with AI server expansion and soft PC demand, which continues to be a headwind.
AI Growth Provides a Silver Lining
Despite the margin headwinds, Dell remains a major player in the AI infrastructure space, forecasting an impressive 53% year-over-year surge in AI server shipments to $15 billion.
Earnings Beat But Revenue Miss
For the fourth quarter, Dell reported:
- Adjusted EPS of $2.68, exceeding estimates of $2.53 per share.
- Revenue of $23.93 billion, slightly below the expected $24.56 billion.
- Forecasted Q1 adjusted EPS of $1.65, below analyst estimates of $1.83.
- Projected revenue between $22.5 billion and $23.5 billion, missing expectations of $23.72 billion.
- Full-year 2026 adjusted EPS expected to be $9.30**, slightly above consensus at $9.29.
Technical Outlook
NYSE:DELL stock closed down 6.26% in Thursday’s session and extended losses in Friday’s premarket trading, currently down 2.23%. The Relative Strength Index (RSI) sits at 41.16, reflecting a weak technical setup.
If the post-earnings sentiment worsens, Dell’s 1-month low could serve as a critical support pivot. Conversely, a break above the 38.2% Fibonacci retracement level could signal a bullish reversal, paving the way for a potential rebound.
