Dell Technologies (DELL), 11% Volatility Expected After Earnings Release

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The options market is reflecting a potential 11% surge or drop in Dell Technologies (DELL) after its earnings announcement.

According to Beincrypto on August 31 (local time), options expiring on September 4 reflected the possibility of Dell's stock price moving by approximately 11% after the earnings announcement. Based on Monday's closing price of $456.01, the at-the-money straddle price was about $52. A straddle is a strategy of simultaneously buying a call option and a put option with the same strike price.

Dell forecast Q2 revenue of $44 billion to $45 billion and adjusted diluted earnings per share (EPS) of $4.80. The AI server revenue forecast is approximately $15.5 billion. The Infrastructure Solutions Group, which includes server and storage businesses, is expected to grow by about 75%. Zacks Investment Research compiled an EPS forecast of $4.72. EPS for the same period last year was $2.10.

The raised expectations stemmed from the previous quarter's performance. Dell's Q1 revenue was a record $43.8 billion, up 88% year-over-year. Adjusted EPS was $4.86, significantly exceeding market expectations. Dell subsequently raised its annual revenue forecast midpoint to $167 billion and its AI server revenue target to $60 billion. The stock price has risen by approximately 260% since 2026.

In this earnings report, AI orders and profitability are considered key variables. Dell secured $24.4 billion in AI orders last quarter, and its AI order backlog reached a record high of $51.3 billion. Jeff Clarke, Dell Vice Chairman and Chief Operating Officer, raised the AI server revenue outlook to $60 billion, stating that it “shows no signs of the AI opportunity slowing down.” However, AI servers are less profitable than storage. Chief Financial Officer David Kennedy identified memory chips, processors, and hard drives as supply constraints.

Among 15 analysts covering Dell on Wall Street, 11 issued a “buy” rating and 4 issued a “hold” rating. The average target price is $523.54, with the lowest target price being $434. Just as Nvidia (NVDA) did not see a significant stock reaction despite exceeding its earnings outlook, it will not be easy for Dell to meet investors' expectations with revenue alone. Further upward revision of the annual outlook and the component supply situation in the second half of the year were presented as key variables that will determine the stock's direction after the earnings announcement.

[Article Key Summary]

-Dell's options expiring on September 4 reflect the possibility of the stock moving by approximately 11% after the earnings announcement.

-Dell forecasts approximately $15.5 billion in Q2 AI server revenue, and its AI order backlog reached a record high of $51.3 billion.

-Wall Street views AI order growth, profitability, and the component supply situation in the second half of the year as key variables for this earnings report, rather than just revenue.

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