This Former AI Darling is in Trouble 📊🐻

Dell Technologies $DELL just reported mixed results, and the market beat it down as a result.

The stock has been an AI darling this cycle, rising over 400%. However, the sentiment is changing.

The market is now consistently punishing the stock when it reports earnings. This isn't something you see in uptrends.

What's going on with DELL?

The company is facing an increased amount of competition, which is causing a compression in margins. The market isn't happy about it...

In addition, it had to revise its previously issued financial results due to unrecorded supplier credits. That's no bueno.

The bottom line is Dell is trending in the wrong direction, and we think it has more trouble ahead.

We have a lot to unpack today, so let's talk about what else happened 👇

Here are the latest earnings reactions from the S&P 500:

*click the image to enlarge it

As you can see, AES Corp $AES had the best reaction score on Friday, and NetApp $NTAP had the worst.  

The stock with the largest market capitalization was Dell Technologies $DELL, and the smallest was Mosaic $MOS.

Autodesk $ADSK and Solventum $SOLV were punished for reporting double beats. The reactions were nasty!

On the flip side, all of the gainers reported mixed results.

Now, let's dig into the data and talk about the most significant earnings reactions 👇

AES had its best earnings reaction since 2009:

The AES Corp. reported mixed results and rallied 11.66%. Its reaction score was 3.07.

The company reported earnings per share in 2024 that were well above its guidance range. This is super bullish.

In addition to crushing it last year, they issued fresh guidance for 2025 that was much better than anticipated.

The market loved everything about this earnings report.

The stock is scooping back above a key pivot low from late 2023 and looks poised to continue climbing higher.

If AES is above 11.50, the path of least resistance is higher for the foreseeable future.

The market has consistently punished DELL for its earnings reports:

Dell Technologies reported mixed results and fell nearly 5%. Its reaction score was -3.41.

The stock looks vulnerable to further downside as it's on the cusp of resolving a prolonged distribution pattern.

If and when DELL closes below 100, the path of least resistance will shift from sideways to lower for the foreseeable future.

NTAP had its worst earnings reaction since 2007:

NetApp reported a double miss and fell over 15%. Its reaction score was -8.68.

The company reported revenue well below the midpoint of its guidance. Moreover, they issued weaker-than-expected revenue guidance.

They're also completing the divesture from Spot by NetApp this month. The market doesn't love this deal.

The stock decisively resolved a prolonged distribution pattern on the heels of this earnings report. This was a big win for the bears.

As long as NTAP is below 115, the path of least resistance is lower for the foreseeable future.

Thank you for reading.

- The Beat Report Team