Dell Technologies Stock Falls Alongside Super Micro: What's Going On?

Dell Technologies Inc DELL shares are moving lower Wednesday in sympathy with Super Micro Computer Inc SMCI, which reported preliminary results late Tuesday. Here’s what you need to know.

What Happened: After the market close on Tuesday, Super Micro preannounced expectations for the third quarter due to delayed customer platform decisions that moved sales into the fourth quarter.

The company reported soft preliminary results that sent shares tumbling, including expectations for third-quarter revenue of $4.5 billion to $4.6 billion, down from prior guidance of $5 billion to $6 billion. Super Micro also said it expects to report third-quarter adjusted earnings in the range of 29 cents to 31 cents per share, down from prior guidance of 46 cents to 62 cents per share.

Super Micro also expects gross margin for the third quarter to be 220 basis points lower than the second quarter, primarily due to "higher inventory reserves resulting from older generation products and expedited costs to enable time-to-market for new products."

Check This Out: ‘It’s Pretty Much Game Over For Nvidia In China,’ Says Analyst: Here’s Why

Why It Matters For DELL: Dell is one of Super Micro’s main competitors, specifically in the AI space. Both companies offer high-performance server solutions used in enterprise, cloud and AI workloads.

Dell and Super Micro are key NVIDIA Corp NVDA partners, delivering GPU systems for generative AI and machine learning. Both companies take Nvidia's chips, package them into servers and then sell them to AI hyperscalers.

Super Micro shares were last down approximately 19%, dragging Dell and Nvidia down with it. Nvidia shares fell about 2% when Super Micro reported preliminary results. Dell shares fell more than 4% on the news and have continued to move lower Wednesday morning.

Dell is due to report financial results for the first quarter sometime next month. Analysts currently expect the company to report earnings of $1.67 per share and revenue of $23.11 billion, according to estimates from Benzinga Pro. In the company’s prior two quarters, Dell beat earnings estimates, but fell short on revenue.

DELL Price Action: Dell shares were down 6.27% at $87.90 at the time of publication Wednesday, according to Benzinga Pro.

Photo: Gabriel Pahontu/Shutterstock.