Dell Q3 Earnings Preview: Market Expert Says 'It's All About That Guide'

Dell Technologies DELL stock is up over 90% year-to-date and investors will be looking for a streak of earnings beats to continue when the company reports third-quarter financial results after market close Tuesday.

Earnings Estimates: Analysts expect Dell to report third-quarter revenue of $24.65 billion, up from $22.25 billion in last year's third quarter, according to data from Benzinga Pro.

The company has beaten analyst estimates for revenue in three straight quarters and eight of the last 10 quarters overall.

Analysts expect Dell to report third-quarter earnings per share of $2.05, up from $1.88 in last year's third quarter. The company has beaten analyst estimates in 10 straight quarters.

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What Experts are Saying: Dell shares have rebounded since falling below $90 three months ago, but remain off of highs, Freedom Capital Markets Chief Global Strategist Jay Woods wrote in his weekly newsletter.

"Dell Technologies shares suffered a big hit two quarters ago and have never recovered to those heights," Woods noted.

Woods said that Dell's quarterly report is more about forward commentary than third-quarter results.

"It's all about that guide."

With Dell shares up in recent months, Woods said the long-term strength of the trend could be tested with a negative reaction.

"Watch the moving averages on a dip to see if they hold the area between $120 and $125. If shares gap lower it may take months to get back on track."

If the report is positive, Woods anticipates minor resistance at $150, noting "smooth skies to $160" once that level is surpassed. Woods indicated that, with strong earnings and guidance, a return to the all-time highs reached in May is also possible.

Here are some other recent analyst ratings on Dell Technologies and their price targets:

• Evercore ISI: Reiterated Outperform rating with $150 price target.
• Well Fargo: Maintained Overweight rating and raised the price target from $140 to $160.
• Morgan Stanley: Maintained Overweight rating and raised the price target from $136 to $154.

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Key Items to Watch: Like many other technology companies, Dell's results could stress the importance of AI growth moving forward.

"Our AI momentum accelerated in Q2, and we've seen an increase in the number of enterprise customers buying AI solutions each quarter," Dell Chief Operating Officer Jeff Clarke said after second-quarter results.

Clarke said AI-optimized server demand was $3.2 billion in the second quarter, up 23% from the first quarter. The company's AI-optimized server backlog was $3.8 billion at the end of the second quarter.

"And our pipeline has grown to several multiples of our backlog."

Investors and analysts will be looking to see if this segment grew its backlog and posted revenue growth on a quarter-over-quarter basis once again.

Client Solutions Group could be another area to watch, with second-quarter segment revenue of $12.4 billion down 4% year-over-year.

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