Dell Jumps 16%, But Have We Reached Peak Earnings?

Dell jumped almost 16% after another strong quarter, taking the stock back towards $500.

Although this move is dramatic, what people are missing is that Dell has already spent roughly three months trading around these levels…

But holders should not ought to be too unsatisfied about these results, especially when Dell had crypto-like moves this year, going from about $114 in February to above $400 by late May.

That’s around a 350% gain in a single quarter.

The question now is, even if Dell delivered on earnings yet again, are the peak earnings already in?

Do macro and future guidance justify large specs to invest more, after such an extreme run?

Guidance did the heavy lifting

Revenue reached $47.0 billion, AI server orders hit $60.9 billion and backlog climbed to $95 billion. Those numbers describe the quarter that just ended. The bigger signal came from management’s outlook.

Dell now expects Q3 revenue of roughly $49 billion, above Q2’s $47 billion. Adjusted EPS is guided to about $6.50 versus $7.04 just reported, so Q2’s profitability may have been unusually strong even as sales continue to grow.

Demand is still running ahead of supply. Dell says customers are ordering further in advance while memory, CPUs, optics, power equipment and cooling remain constrained. Enterprise adoption is also broadening, which reduces some of the concern that the AI buildout depends on only a few giant cloud buyers.

$500-$514 is the test

Dell is back in the $500-$514 resistance zone after spending roughly 96 days around these highs without making much net progress. A sustained break above $514 would finally confirm a new leg higher.

Around $469 is the first warning level if the price begins to fade below.

Below that, the rising 4-hour 100-EMA band around $412-$440 becomes an important trend test.

Zooming out, Dell has already reached roughly $480, the measured target from the larger inverse head-and-shoulders breakout.

The stock can still grind higher, but much of the easy technical move has already happened. 

Traders now need to be wary of the bearish RSI divergence on the weekly timeframe.

And additionally, note how Dell has previously peaked during an uptrend with a large volume candle.

Retracements from here could go back towards psychological levels of $300 and $200.

Bottom Line: Have Earnings Peaked?

Some of the hesitation around Dell may simply come down to timing.

Markets still have CPI, PPI and the FOMC meeting ahead, while oil keeps another source of inflation pressure in the background.

If inflation stays sticky and oil remains high, the case for another Fed hike gets stronger. That would make it harder for expensive stocks to keep pushing higher.

A surprise hold could give strong earners like Dell more room to grind higher.

So the careful answer is maybe.

This is because the macro environment is rendering investors in a wait-and-see mode.

Let the technicals show the direction and wait for the macro catalysts to arrive. Once they show their hand, markets may either breathe a sigh of relief, or start taking the peak-earnings question much more seriously.