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DELL Signs $150M Deal With Imbue, Strengthens Prospects

Dell Technologies DELL is benefiting from an expanding clientele and portfolio strength. The latest client is an AI research company, Imbue, with which the company recently inked a deal to develop a new high-performance computing cluster.

The Dell-Imbue deal is worth $150 million. The high-performance computing cluster will be used to train foundation models optimized for reasoning. Imbue uses these models to train AI agents that can work for people across diverse domains.

Imbue already uses Dell PowerEdge XE9680 servers powered by NVIDIA NVDA H100 Tensor Core GPUs to train AI models and prototype agents that can correct bugs in code and analyze lengthy documents.

Dell systems are built for extreme acceleration for AI, machine learning and deep learning training. These systems are equipped to deploy AI computing initiatives with high GPU memory, bandwidth and security. It will help Imbue develop more capable, trustworthy AI agents that will not require constant supervision from users.

Dell Technologies Inc. Price and Consensus

Dell Technologies Inc. price-consensus-chart | Dell Technologies Inc. Quote

Dell’s Expanding Generative AI Portfolio Aids Prospects

Dell’s expanding Generative AI solutions portfolio is expected to accelerate top-line growth.

Dell’s latest solution, the Dell Validated Design for Generative AI with NVIDIA for Model Customization, offers pre-trained models that extract intelligence from data, sparing enterprises from building models from scratch.

Dell Validated Designs for Generative AI now supports both model tuning and inferencing. The solution is supported by the Dell PowerEdge XE9680 AI server or the Dell PowerEdge XE8640, with a choice of NVIDIA Tensor Core GPUs and NVIDIA AI Enterprise software, which offers frameworks, pre-trained models and development tools, such as the NVIDIA NeMo framework and Dell software.

Dell also offers storage options like PowerScale and ObjectScale, which help customers rapidly feed models with multiple storage data types with the validated design. The infrastructure is also available as a subscription via Dell APEX.

Dell’s partnership with Starburst will help customers accelerate AI and analytics efforts driven by an open, modern data lakehouse solution. The solution will be available in the first half of 2024.

Third-Quarter Guidance Reflects Tough Environment

Dell expects fiscal third-quarter revenues in the range of $22.5-$23.5 billion, unchanged sequentially. Earnings are expected to be $1.45 per share (+/- 10 cents).

The Zacks Consensus Estimate for revenues is pegged at $22.93 billion, suggesting a 7.23% decline from the figure reported in the year-ago quarter.

The consensus mark for quarterly earnings is pegged at $1.47 per share, indicating a 36.09% decline from the year-ago quarter’s figure. The consensus estimate for earnings has been steady over the past 30 days.

Dell expects both Client Solutions Group and Infrastructure Solutions Group revenues to be roughly flat sequentially in the to-be-reported quarter. Continued sluggish IT spending by corporate and global enterprise customers is expected to have hurt top-line growth.

Moreover, unfavorable foreign exchange is expected to have been a headwind. Dell expects roughly 40 basis points impact on revenues.

Zacks Rank & Other Stocks to Consider

Dell currently has a Zacks Rank #2 (Buy).

Shares of Dell have returned 84.1% year to date, outperforming the Zacks Computer & Technology sector’s gain of 45.6%.

A couple of better-ranked stocks in the broader technology sector are Dropbox DBX and Pinterest PINS, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Dropbox shares have gained 25.6% in the year-to-date period. DBX’s long-term earnings growth rate is currently projected at 14.63%.

Pinterest shares have gained 32.8% in the year-to-date period. The long-term earnings growth rate for PINS is currently projected at 35.87%.

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