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- 📈 Dell Dips Despite AI Boom
📈 Dell Dips Despite AI Boom
Fed officials see rate cuts ahead, CrowdStrike earnings disappoint, Workday stock slips, Nordstrom tops expectations, Dell’s AI pipeline
Evelio Silvera
November 27, 2024
Good morning.
⚡ The Fast Five → Fed officials see rate cuts ahead, CrowdStrike earnings disappoint, Workday stock slips, Nordstrom tops expectations, Dell’s AI pipeline
🔎 Market Trends → Wall St ends higher; markets digest Trump tariff threats, Fed minutes; US Futures Hold Steady Ahead of PCE Data
And now…
⏱️ Your 5-minute briefing for Wednesday, November 27, 2024:
MARKET BRIEF
Before the Open
As of market close 11/26/2024.
Pre-Market
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Fear & Greed
Markets in Review
Dow, S&P 500 Hit Record Closes
The Dow Jones Industrial Average climbed 0.3% to close at 44,860.3, while the S&P 500 rose 0.6% to finish at 6,021.6—both setting all-time highs. The Nasdaq Composite advanced 0.6% to 19,174.3, fueled by strength in utilities.
The Big Picture:
Investors shook off trade tension concerns as President-elect Trump hinted at aggressive tariff policies, including a potential 25% levy on North American imports and 10% on Chinese goods. Markets remained resilient, seeing the move as a negotiation tactic rather than a lasting policy.
Treasury yields edged higher, with the 10-year yield up 3.3 basis points to 4.3%, while the 2-year yield stayed flat at 4.25%. Meanwhile, commodities cooled off, with WTI crude oil slipping 0.4% to $68.70 per barrel.
The Fed minutes revealed cautious optimism: policymakers are open to gradual rate reductions if inflation moderates and the labor market holds steady. This dovish stance keeps the door open for growth-friendly policies heading into 2025.
Market Movers:
NRG Energy (NRG): Surged 10.1% after Jefferies upgraded the stock, citing improved fundamentals and raising its price target to $113.
J.M. Smucker (SJM): Jumped 5.7% on strong quarterly earnings and a raised full-year outlook.
Amgen (AMGN): Dropped 4.8%, weighed down by underwhelming phase 2 results for its obesity drug candidate.
Intel (INTC): Slid 3.3% as takeover speculation involving Qualcomm (QCOM) cooled, compounded by execution risks.
What They’re Saying:
"The tariff threat may not materialize, and even if it does, it could be short-lived," Scotiabank noted, reflecting market confidence in Trump’s strategic playbook.
WHAT WE’RE WATCHING
Events
Wed. Nov 27: Dept. of Labor - Unemployment Claims - 8:30am
Why You Should Care: Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country's monetary policy.
Wed. Nov 27: Bureau of Economic Analysis - GDP Second Release - 8:30am
Why You Should Care: It's the broadest measure of economic activity and the primary gauge of the economy's health.
Earnings Reports
Today: Patterson Companies, Kroger, Zumiez
Tomorrow: (Thanksgiving)
MARKET BRIEF
Leading News
Dell Shares Dip Despite AI Boom
Why it matters:
Dell Technologies (DELL) is a key player in AI infrastructure, and while Q3 results showed strength in AI-driven segments, cautious Q4 guidance rattled investors. The company’s 86% YTD stock surge underscores its long-term potential, but near-term headwinds could create buy-the-dip opportunities.
Zoom Out:
Dell’s Q3 earnings delivered a 14% EPS beat, driven by a 58% surge in AI-related server sales. Yet, revenue of $24.4 billion fell short of Wall Street's $24.7 billion forecast, and Q4 guidance disappointed with a midpoint target of $24.5 billion, below analysts' $25.6 billion.
CEO Michael Dell and COO Jeff Clarke emphasized the "early innings" of enterprise AI adoption, as firms navigate evolving chip technologies like Nvidia's Blackwell GPUs. Despite near-term turbulence, Dell’s $4.5 billion AI sales pipeline positions it as a cornerstone supplier for AI workloads.
With a stronghold in servers, Dell is tapping demand from cloud providers, enterprises, and governments seeking AI-ready infrastructure. While PC sales lagged, the AI-driven Infrastructure Solutions Group now accounts for 47% of total revenue, a clear pivot toward higher-margin growth.
Deep Dive:
AI Supercharge: Infrastructure Solutions revenue jumped 34% YoY to $11.4 billion, with $7.4 billion from servers and networking equipment. AI servers alone contributed $2.9 billion in sales, with $3.6 billion in future bookings.
Consumer Weakness: PC revenues fell 18% YoY, with total Client Solutions revenue slipping 1%. Enterprise spending rose, softening the blow.
Chip Transition Delays: Customers postponed orders awaiting Nvidia’s Blackwell GPUs, shifting demand into future quarters—a bullish signal for long-term growth.
Market Pulse:
"AI is a robust opportunity for us with no signs of slowing down." – Jeff Clarke, COO, Dell Technologies
Bull’s Take:
Dell's short-term volatility offers a strategic entry point for investors. Its dominance in AI infrastructure and partnerships with Nvidia position it as a long-term winner in the AI race. While challenges in PCs and chip supply linger, the underlying growth story remains intact. Investors should monitor dips as potential buy zones, particularly with AI orders likely to accelerate in 2025. If you’re bullish on AI, Dell’s pipeline could mean the best is yet to come.
Headlines
CrowdStrike Falls After Disappointing Earnings Outlook (link)
Workday stock slips on light quarterly forecast (link)
Nordstrom tops Wall Street’s earnings expectations (link)
Fed officials see interest rate cuts ahead, but only ‘gradually,’ meeting minutes show (link)
Disney To Pay Out $43M In Pay Equity Class Action Deal (link)
Walmart U.S. CEO John Furner says DEI policy changes will "ensure every customer" feels welcome (link)
CRYPTO
Fear & Greed
Headlines
DAILY SHARE
On the Socials
*Hat-tip to MorningBrew