Dell Beat Earnings Estimates. Why the Stock Is Down.

A Dell computer. The stock has gained around 17% so far this year. (David Paul Morris/Bloomberg)

Shares of Dell Technologies were trading lower late Thursday after the computer maker reported better-than-expected second-quarter financials but issued a third-quarter outlook that missed the mark.

Shares of Dell were down 4.1% in after hours trading.

Dell reported second-quarter adjusted earnings of $2.32 from revenue of $29.78 billion. Analysts surveyed by FactSet were expecting the PC and server company to report earnings of $2.29 a share on revenue of $29 billion.

Dell reports revenue for both its Client Solutions Group, which includes PCs and other commercial hardware, and its Infrastructure Solutions Group, which includes servers that help power artificial intelligence.

Infrastructure Solutions Group revenue of $16.8 billion beat expectations of $15.64 billion. “Demand for our AI solutions continues to be exceptional, and we’re raising our AI server shipment guidance,” Jeff Clarke, chief operating officer, said in the earnings release.

Dell now expects AI server shipments for fiscal 2026 to total $20 billion, up from a prior call of $15 billion.

However, Dell also said it expects third-quarter adjusted earnings to fall in a range with a midpoint of $2.45 a share, while analysts expected $2.55.

Client Solutions Group revenue was $12.5 billion, which missed Wall Street estimates for $12.97 billion. These results came after competitor HP reported stronger-than-expected demand for personal computers on Wednesday. HP closed up 4.6% on Thursday.

President Donald Trump has implemented stiff tariffs in what he says is a bid to bring manufacturing back to the U.S. However, some tech hardware is exempt from the highest levies as so-called Section 232 investigations into electronic products continue. Those investigations examine whether imports of certain products are a threat to national security.

Investors are watching to see whether consumers’ purchasing power, including for electronics, will be eroded as tariffs boost prices.

Write to Angela Palumbo at angela.palumbo@dowjones.com