Prediction: This artificial intelligence (AI) stock will rise even further after November 26th

Dell Technologies (DELL 3.81%) The stock market has been in top form so far in 2024, rising an impressive 76% as of this writing. This happened due to a turnaround in the company’s business due to growing demand for its server solutions used for assembling artificial intelligence (AI) chips.

The stock’s 2024 rally will be put to the test when Dell reports its third-quarter fiscal 2025 results on Tuesday, November 26. Let’s see what investors can expect from Dell when the company releases its quarterly report and see if the forecasts will be solid enough to help it continue its impressive rally.

Dell’s results may exceed expectations

When Dell reported its second-quarter fiscal 2025 results in August, management indicated that the company’s growth was likely to accelerate in the second half of the fiscal year. The company forecast third-quarter revenue of $24.5 billion, midway through its guidance range, up 10% from the year-ago quarter.

Dell expects adjusted earnings to be $2 per share at the midpoint. Consensus estimates compiled by Yahoo! However, Finance expects Dell to earn $2.04 per share on revenue of $24.7 billion. It will come as no surprise that the company will exceed Wall Street’s heightened expectations thanks to solid demand for its AI servers.

For example, Dell sold $3.2 billion worth of AI servers in the fiscal second quarter, compared to $2.6 billion in the first quarter. Once again, strong performance appears to be on the cards as the company ended the second quarter with an AI server backlog of $3.8 billion.

It also noted that the company has a potential revenue pipeline that has “grown to multiples of our backlog.” If Dell manages to ship more AI servers thanks to an improved supply chain, there’s a good chance the company will post better-than-expected numbers.

Another factor that could work in Dell’s favor is its competitor’s problems Super microcomputer (SMCI 11.62%) stands before. Supermicro shares have plunged on negative news, including allegations of accounting manipulation, the resignation of its auditor and management’s failure to file its annual report within the stipulated deadline.

It now appears that Supermicro’s customers are migrating their orders away from the company. As Tom’s Hardware reports, Elon Musk’s xAI has reportedly picked up $6 billion in AI server contracts from Supermicro. The report adds that Dell could be one of the biggest beneficiaries of such a development, as it is one of the largest server manufacturers in the world.

Additionally, Dell reportedly has half of the AI ​​server orders from Elon Musk-led companies (with Supermicro controlling the other half). If Supermicro does indeed lose orders for AI servers, there is a greater chance that Dell will deliver better results and guidance than expected.

The long-term picture remains rosy

With the stage set for Dell to deliver better-than-expected results, investors should also note that a negative reaction to the company’s results should be viewed as a buying opportunity. That’s because the global AI server market is expected to reach $177 billion in annual revenue by 2032, up from $38 billion last year, according to Global Market Insights.

This explains why Dell management noted in the last earnings call that the company has a solid customer pipeline for its AI servers that is significantly larger than its order backlog. If Dell can convert this pipeline into actual revenue and capture a larger share of the AI ​​server market, the company could see long-term acceleration in its revenue and profit growth.

It’s worth noting that Dell’s fiscal 2024 earnings fell 6% year over year to $7.13 per share. The company expects to generate earnings of $7.80 per share in fiscal 2025, which would represent a 9% year-over-year improvement at the midpoint. The forecast for the next few years suggests a stronger increase in Dell’s financial results.

DELL earnings per share estimates for next fiscal year data from YCharts.

With Dell currently trading at 25 times trailing earnings and 13 times forward earnings, investors are currently getting a good deal on this AI stock. They may want to grab it with both hands as it is expected to take off after the results are released on November 26th.