Dell Technologies lifts full year outlook as booming AI server demand drives earnings and revenue beat

Market Performance

South African Market Summary

South African equities closed softer yesterday, with the JSE All Share index down 0.29% at 115,096.47 points and the Top 40 slipping 0.26% to 107,235.45 points. Sentiment was pressured by the South African Reserve Bank’s decision to raise the repo rate by 25 basis points to 7.00%, its first increase in three years, as policymakers responded to renewed inflation pressure. Consumer inflation accelerated to 4.0% year-on-year in April, above the bank’s 3% target, while producer inflation rose sharply to 4.8% from 2.3% in March. Investors also monitored political developments, with Parliament set to convene an impeachment committee next Monday to examine allegations linked to President Cyril Ramaphosa’s “Farmgate” scandal.

European Market Summary

European equities closed lower on Thursday, although losses moderated after reports that the United States and Iran had agreed to extend a ceasefire and begin negotiations. The pan-European STOXX 600 fell 0.5% to 625.11 points, with major regional bourses also ending in negative territory as geopolitical uncertainty and higher energy prices continued to weigh on sentiment. Investors are now looking to next month’s European Central Bank policy meeting as a key market catalyst, with traders pricing in a high probability of a 25-basis-point rate increase. In the UK, Lloyds data showed business sentiment improved in May, nearing pre-war levels. Meanwhile, Poland is preparing to finance major military equipment purchases under the European Union’s SAFE programme.

US Market Summary

US equities advanced on Thursday, with the S&P 500 and Nasdaq reaching record closing highs after reports suggested the US and Iran had reached a draft agreement to extend their ceasefire for 60 days. The Dow Jones Industrial Average also edged higher to a fresh closing high, although confirmation of the agreement remains subject to approval by President Donald Trump. Investors also assessed inflation data showing US prices rising at their fastest pace in three years in April, driven by higher energy costs linked to the Iran war. First-quarter GDP growth was revised down to 1.6% annualised, pointing to softer momentum. Dollar Tree and Best Buy rallied after issuing stronger profit and sales guidance, supporting broader retail sentiment.

Asian Market Summary

Asia-Pacific markets traded higher on Friday as investors balanced renewed military activity involving Iran against signs that Washington and Tehran were moving closer to a temporary agreement to pause their three-month conflict. In Japan, Tokyo core inflation remained below the Bank of Japan’s 2% target for a fourth consecutive month in May, as fuel and tuition subsidies helped offset raw material cost pressures linked to the Middle East conflict. Separate data showed Japan’s factory output rebounded in April, supported by strong AI-related demand, although other sectors remained under pressure from higher energy costs. Technology sentiment was further supported by Foxconn, whose chairman expressed strong confidence in growth momentum as artificial intelligence demand continues to reshape seasonal patterns across the electronics supply chain.

Currency Market Summary

The South African rand firmed slightly on Thursday afternoon after the South African Reserve Bank raised its key interest rate by 25 basis points and local data showed a sharp acceleration in producer inflation during April. The move supported the currency by reinforcing expectations of tighter monetary policy as inflation pressures build. Globally, the US dollar extended its weakness against major currencies on Friday and was on track to end the week lower, pressured by reports that Washington and Tehran had reached a preliminary agreement to extend their ceasefire and ease shipping restrictions through the Strait of Hormuz. The dollar index was largely flat at 98.997 after Thursday’s decline and is set to snap two consecutive weeks of gains.

Commodity Market Summary

Gold edged higher on Friday as investors assessed reports of a possible US-Iran ceasefire extension against persistent concerns over inflation and the outlook for US interest rates. Oil prices slipped slightly on hopes that Washington and Tehran were moving closer to an agreement, although comments from US Vice President JD Vance that the parties were “close” but not yet there helped limit losses. Crude markets remained volatile after recent sharp swings, driven by conflicting signals over a potential end to the three-month Iran war and the possible reopening of the Strait of Hormuz, a critical route for global oil and liquefied natural gas flows. Traffic through the chokepoint remains well below pre-war levels, keeping supply-risk premiums elevated.

Domestic Company News

Lewis Group Limited (LEW) +5.60%

Lewis Group reported a solid performance for the year ended 31 March 2026, supported by higher sales, stronger credit growth and improved profitability. Revenue increased 11.1% to R10.3 billion, with merchandise sales rising 7.3% to R5.5 billion and other revenue up 15.7% to R4.9 billion. The gross profit margin improved to 43.7% from 43.4%, while the debtors book expanded 15.2%, reflecting continued demand across the group’s credit-based retail offering. Operating profit rose 12.8% to R1.3 billion, with earnings per share increasing 13.0% to 1 646 cents and headline earnings per share up 18.3% to 1 753 cents. The total dividend increased 12.1% to 897 cents per share, while return on equity improved to 16.2%.

Sirius Real Estate Limited (SRE) -0.27%

Sirius Real Estate has notarised the acquisition of a light-industrial business park in Fulda, Germany, for total acquisition costs of €49.8 million, expanding its exposure to assets supported by structural defence demand. The 57,771 sqm site is fully let and generates annual rent roll of €3.93 million, with a 5.1-year weighted average lease expiry and an EPRA net initial yield of 7.8%. The production-led asset is anchored by a European manufacturer of ballistic protection equipment, which accounts for 78% of rent roll and is expected to take additional space over time. Sirius said the acquisition offers strong income visibility, asset management potential and exposure to a high-quality industrial location near Frankfurt, with recently acquired defence assets now exceeding €200 million.

Life Healthcare Group Holdings Limited (LHC) -5.54%

Life Healthcare reported a steady interim performance for the six months ended 31 March 2026, supported by revenue growth, margin improvement and stronger underlying earnings. Revenue increased 2.4% to R12.4 billion, while normalised EBITDA rose 5.2%, with the margin expanding by 0.5 percentage points. Operating profit before non-trading items increased 8.4%, although the group was affected by a funder placed under curatorship. Normalised earnings per share, which better reflects underlying performance by excluding non-trading items, increased 8.4% to 53.1 cents. Total earnings per share improved to 52.8 cents, mainly due to the prior-period R2.9 billion fair value adjustment to the Piramal liability. Gearing remained healthy below one times, while ROCE reached 17.8%. The board declared a 23.0 cents interim dividend.

Adcorp Holdings (ADR) +3.90%

Adcorp reported a mixed performance for the year ended 28 February 2026, with weaker revenue and gross profit offset by improved profitability and higher earnings. Revenue declined 5.9% to R12.46 billion, while gross profit decreased 5.1% to R1.24 billion, reflecting softer trading conditions. However, operating profit increased 3.3% to R177.3 million and profit for the year rose 3.6% to R146.0 million, indicating improved cost control and operational efficiency. Earnings per share increased 5.3% to 141.9 cents, while headline earnings per share rose 13.0% to 153.0 cents. The group ended the period with net unrestricted cash of R342.1 million and declared a total gross dividend of 71.69440 cents per share, while maintaining its B-BBEE level 1 rating.

Global Company News

Costco Wholesale Corporation (COST) -0.85%

Costco Wholesale reported stronger-than-expected third-quarter sales as elevated fuel prices drove more consumers to its lower-priced gas stations and supported broader warehouse traffic. Total revenue rose 12% to US$70.53 billion, ahead of analyst expectations of US$69.81 billion, while net income increased 15% to US$2.19 billion. Adjusted earnings of US$4.93 per share met forecasts. US comparable sales, including gas, increased 9.4%, comfortably ahead of expectations, as budget-conscious consumers sought value amid inflation pressure and higher energy costs linked to the Iran war. Management said lower fuel prices encouraged first-time gas station usage, with fuel customers typically spending more in warehouses. Margins were affected by lower beef prices and higher transport costs, while Costco continued investing in faster delivery.

Dell Technologies Inc (DELL) +3.84%

Dell raised its full-year revenue and profit outlook after first-quarter results comfortably exceeded expectations, highlighting strong demand for AI-optimised servers as customers expand data centre capacity. Revenue surged 88% to US$43.84 billion, ahead of LSEG expectations of US$35.43 billion, while adjusted earnings of US$4.86 per share beat forecasts of US$2.94. Infrastructure Solutions Group revenue, which includes servers, storage and software, jumped 181%, while Client Solutions Group sales rose 17%. Dell now expects fiscal 2027 AI server revenue of about US$60 billion, up from US$50 billion previously, and lifted its annual revenue outlook to US$165 billion-US$169 billion. Adjusted EPS guidance increased to US$17.90. The company is also benefiting from AI infrastructure spending and a US$9.7 billion Department of Defense contract.

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