Michael Dell, the founder and CEO of the computer manufacturer Dell Technologies, experienced the largest single-day decline in his wealth due to a sharp fall in Dell shares. Dell's net worth dropped $11.7 billion to $107.1 billion on Friday as shares of Dell Technologies Inc. fell 18% in New York, Fortune reported.
Dell is on track to lose more than USD 21 billion in market value if losses hold. The drop in Dell's stock came after investors were discouraged by the company's lower-than-expected artificial intelligence server backlog and an estimated decline in margins.
As a result of the decline, the 59-year-old tech billionaire now ranks 13th on the Bloomberg Billionaires Index with a net worth of $107.1 billion. Notably, Mr Dell's wealth primarily comes from Dell Technologies Inc., a company he started over 40 years ago while studying at the University of Texas. Another major source of his net worth comes from his stake in Broadcom Inc., whose shares also slid on Friday.
In early March, he joined the exclusive group of individuals with fortunes exceeding $100 billion, driven by the increasing demand for AI computing equipment, which pushed Dell's shares to a record high. Large corporations increasingly need high-powered servers to train and run demanding generative AI tasks, which are sold by Dell and a few other companies.
As per CNBC, Dell reported first-quarter earnings on Thursday that beat analysts' estimates for earnings and sales, as the company has emerged as one of the top vendors for artificial intelligence servers. However, its shares fell more than 15% in after-hours trading on concerns Dell's AI servers aren't making the company a lot of money yet.
Before Thursday's report, Dell shares had more than doubled in 2024.
''Relative to very high expectations, Dell's Q1 25 results were disappointing,'' Toni Sacconaghi, an analyst at Sanford Bernstein said. He pointed out that a decrease in adjusted operating margin in the quarter resurfaces ''concerns that AI servers are being sold at near-zero margins.''
Speaking in a post-earnings call, executives at Dell flagged that gross margins have come under pressure from a "more competitive pricing environment and a higher AI-optimized server mix."
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