Dell Earnings: Look Past Muted Quarterly AI Server Revenue; Longer-Term Demand Trends All Healthy

No-moat Dell Technologies reported fiscal 2025 third-quarter earnings that mildly beat our EPS estimates. However, the big story was all the moving parts within artificial intelligence revenue. We think weakness in AI-server revenue caused Dell shares to drop by 11% after hours, to $126 per share. We would look past these near-term speed bumps, as other long-term demand metrics remain healthy. We raise our fair value estimate to $121 per share from $114, and we now view shares as fairly valued following the after-hours drop. We think the long-term story remains bright for Dell, but the market had gotten ahead of itself in anticipation of results.