Dell Technologies (DELL) stock traded more than 10% lower on Wednesday following its quarterly earnings report.
is facing market pressure following its Q3 earnings report, as investor concerns mount over weak forward guidance and cautious IT spending by major clients.
Despite a smaller EPS beat compared to Q2, Dell still posted solid results with a year-over-year revenue increase of 9.5% to $24.37 billion. The increase in revenue is the largest jump over the last ten quarters.
Dell’s revenue increase was driven by robust performance in AI and traditional servers.
The company’s Infrastructure Solutions Group (ISG) saw a notable 34% jump in revenue to $11.37 billion, with server and networking revenue soaring by 58% year-over-year to a record $7.36 billion.
Growth for this sector was bolstered by significant orders from Tier 2 cloud service providers and ongoing expansion in enterprise customer engagement.
Dell also reported shipping $2.9 billion of AI servers during the quarter, leading to a backlog of $4.5 billion and a 50% sequential growth in its 5-quarter pipeline, underscoring strong demand for AI capabilities.
Dell’s management expects challenges in the short term, particularly from enterprise and large customers that are being more careful with their near-term IT expenditures.
Dell is still optimistic about potential tailwinds from sustained AI demand and an aging install base needing technology refreshes, suggesting a rebound in demand next year.
Dell’s stock sliced through support at its bullish 50-day moving average, ultimately finding stronger support at its 200-day moving average. The price level is just above $120.
Dell saw its stock test its 200-day moving average in October with success as shares rallied 20% and 16% after each test.
Investors that have been looking to buy the dip on Dell shares may have their best opportunity during this recent test but should expect some softness in the recovery over the next week.
Dell stock maintains a bullish outlook with a price target of $175.
Shares of Archer Aviation Inc. (ACHR) jumped another 10% on Wednesday pushing the stock to its new all-time highs.
Archer is developing electric vertical takeoff and landing (eVTOL) aircraft.
These innovative vehicles are designed to revolutionize urban air mobility, offering a sustainable and efficient transportation alternative. The company’s approach combines advanced aeronautics with cutting-edge electric propulsion technologies.
Archer’s goal is to reduce urban congestion and contribute to environmental sustainability with both private and commercial vehicles.
Archer has become the target of speculators over the last three weeks, resulting in a parabolic rally in its stock.
Shares broke into a volatility rally in early November after news that Cathie Wood’s ARK Innovation fund had sold positions in Telsa and bought shares of Archer Aviation.
That purchase came shortly after The FAA issued its final rules on the classification of "powered-lift" vehicles, including electric vertical takeoff and landing (eVTOL) aircraft like those developed by Archer Aviation, on October 22, 2024.
The ruling marks a significant regulatory step for the future operation of air taxis and other similar aircraft in the U.S.
Archer shares have seen heavy buying as the stock’s 50-day moving average turned bullish on November 6.
Since then, options traders have been busy buying call options on the stock with price targets above $10.
The company is expected to announce earnings in February 2025.
While speculative in nature, investors should expect that Archer’s bullish trend will continue with a break above $10 leading to a target of $12 for the stock.
Nordstrom (JWN) represented the most recent department store drop on Wednesday as shares fell more than 8%.
The luxury department store chain reported a large decline in sales towards the end of October. The downturn casts a shadow over expectations for a robust holiday shopping season, despite the company's preparations and expressed enthusiasm for the period.
Nordstrom’s reported a strong performance in its Q3 earnings, surpassing expectations largely due to reduced markdowns and lower promotional activity.
The company's strategic shift resulted in a gross margins reaching 35.6%.
That improvement reflects Nordstrom's success in driving strong regular price sales, which supported the financial health of the company during the quarter.
As for forward-looking guidance, Nordstrom has revised its fiscal year 2025 guidance upward slightly but investors are still eyeing the company’s October challenges as a sign that consumers are paring back their spending.
Department stores remain a tough business this year, as consumer spending is tight and shoppers are increasingly seeking better value.
This trend is evident across the sector, with Kohl's (KSS) also reporting disappointing Q3 results and downgrading its 2025 guidance.
Similarly, Macy's (M) encountered its own challenges, delaying its Q3 earnings report due to discovered discrepancies related to delivery expenses, further highlighting the difficulties facing department stores in the current economic environment.
Nordstrom’s stock has been trading in an extremely wide trading range since July as both institutional and retail investors are finding it hard to nail down a direction for the upscale stock.
Historically, higher income households tend to cut back on their budgets earlier than the average household as they plan for economic slowdowns. Brands like RH (RH) and William Sonoma (WSM) are breaking that pattern, though they are more niche in their offerings.
Investors should expect Nordstrom stock to remain volatile with a bearish bias as the company words to level its gameplan for 2025.
