Dell Technologies Q2 Earnings Call Highlights

Key Points

• Record results were driven by AI demand: Fiscal Q2 revenue rose 58% year over year to $47 billion, while non-GAAP EPS surged 203% to $7.04. Infrastructure Solutions Group revenue jumped 89% to $31.8 billion, with $60.9 billion in AI orders and a $95 billion AI backlog.
• Growth broadened beyond AI servers: Traditional server and networking revenue more than doubled to $10.5 billion, storage revenue increased 26% to $4.9 billion, and Client Solutions Group revenue rose 20% to $15 billion.
• Dell raised its full-year outlook: The company now expects fiscal-year revenue of $192 billion and non-GAAP EPS of $25.50, reflecting approximately 70% and 150% growth, respectively. Dell also returned a record $4.3 billion to shareholders during the quarter despite ongoing component supply constraints.

Dell Technologies NYSE: DELL reported record fiscal 2027 second-quarter revenue and earnings, driven by accelerating demand for AI servers, traditional data-center infrastructure, storage and commercial PCs. The company also raised its full-year outlook, citing momentum across each of its major business lines.

Revenue rose 58% year over year to $47 billion, while diluted non-GAAP earnings per share increased 203% to a record $7.04, according to Vice Chairman and Chief Operating Officer Jeff Clarke. Non-GAAP operating income grew 160% to $5.9 billion, and operating margin reached 12.6%.

“Customers no longer see IT environments simply as cost centers, but as value drivers that enable growth, productivity, and competitive advantage,” Clarke said, pointing to spending on infrastructure modernization, AI adoption and client-device refreshes.

AI Orders and Backlog Reach Records

Dell’s Infrastructure Solutions Group, or ISG, generated record revenue of $31.8 billion, up 89% from a year earlier. The segment delivered operating income of $4.8 billion and a 15% operating margin.

AI server demand was a central driver. Dell booked $60.9 billion in AI orders during the quarter and recognized $16.4 billion in AI server revenue. It ended the period with $95 billion in AI backlog. Clarke said Dell’s AI pipeline continued to grow sequentially and remained multiples of its backlog, even after the company converted $131.7 billion into orders during the past 12 months.

The company said its AI infrastructure customer count surpassed 6,500. Clarke said demand was broadening across neocloud providers, sovereign customers and enterprises, while deployments increasingly require engineering, design and installation expertise related to performance, power, cooling and data-center configurations.

Dell also said it became the first company to ship rack systems engineered on NVIDIA’s Vera Rubin platform.

During the question-and-answer session, Clarke said enterprise participation in Dell’s AI infrastructure business continued to increase. The company added 3,300 Dell AI Factory customers in the past three quarters, after taking eight quarters to reach its first 3,200 customers. He said enterprise customer growth, repeat buyers and enterprise revenue all increased sequentially and year over year.

Traditional Servers and Storage Also Expand

Traditional server and networking revenue increased 122% to $10.5 billion, with demand outpacing available supply. Clarke attributed the growth primarily to existing enterprise customers refreshing older infrastructure, consolidating data centers and addressing security and resiliency requirements.

He said Dell still has 1.2 million installed assets using 14th-generation servers or older. The company expects replacement demand to continue as customers move to newer systems with higher processor core counts, more memory and additional storage capacity. Clarke said Dell’s 17th-generation servers can offer consolidation ratios of six to eight older systems to one new system, while 18th-generation servers expected to begin shipping the following month could offer ratios of 12 to 14 to one.

Clarke also cited emerging demand for CPU-based capacity supporting AI and agentic workloads. Dell said it gained more than 10 points of traditional server share over the past two quarters and expects further share gains in the current quarter.

Storage revenue rose 26% to $4.9 billion. Dell said demand for its Dell IP storage portfolio continued to exceed market growth for a sixth consecutive quarter. The company reported growth across PowerFlex, PowerStore, PowerProtect and PowerVault, while its unstructured-storage offerings, including PowerScale and ObjectScale, also expanded.

Clarke said data growth, requirements to store and protect information, and AI-related data-management needs were supporting storage demand. He added that Dell’s Project Lightning parallel file system remained in beta with several customers and was being evaluated in competitive opportunities.

Client Business, Cash Return and Supply Constraints

Dell’s Client Solutions Group, or CSG, posted revenue of $15 billion, up 20%. Commercial revenue increased 22% to $13.2 billion, marking the eighth consecutive quarter of growth, while consumer revenue rose 7% to $1.8 billion.

Chief Financial Officer David Kennedy said CSG operating income was $1.1 billion, or 7.6% of revenue, supported by pricing discipline and greater scale. Dell said large enterprise customers were refreshing their PC installations, while some more cost-sensitive customers were extending replacement cycles, increasing the number of older devices in the installed base.

The company generated $2.2 billion in cash flow from operations and $8.1 billion in adjusted free cash flow during the quarter. It returned a record $4.3 billion to shareholders, including repurchases of 9.5 million shares at an average price of $401 per share and a dividend of about $0.63 per share.

Dell ended the quarter with $14.2 billion in cash and investments and a core leverage ratio of 0.8 times.

Clarke said supply remains constrained across numerous components, including DRAM, NAND, certain CPUs, disk drives, optical products and other parts. He said Dell has sought to optimize available components and shift supply toward infrastructure products, contributing to its increased second-half expectations.

Raised Outlook

For the fiscal third quarter, Dell expects revenue of $49 billion at the midpoint, representing growth of roughly 80% year over year. ISG revenue is expected to grow about 145%, including approximately $19 billion in AI server revenue, while CSG revenue is projected to increase roughly 15%.

Dell forecast third-quarter diluted non-GAAP EPS of $6.50 at the midpoint, up more than 150% from a year earlier.

For the full fiscal year, Dell raised its revenue outlook by $25 billion to $192 billion at the midpoint, implying approximately 70% growth. The company expects diluted non-GAAP EPS of $25.50, up about 150%.

The company projects ISG growth of roughly 120%, supported by AI server revenue of $74 billion, more than triple the prior-year level. Dell expects traditional server revenue to rise just over 100%, storage revenue to increase in the mid-teens and CSG revenue to grow in the mid-teens. It expects operating expenses to equal approximately 8% of revenue for the year, which Kennedy said would be the lowest rate in the company’s 42-year history.

About Dell Technologies (NYSE:DELL)

Dell Technologies Inc is a multinational technology company that designs, manufactures and sells a broad range of information technology products, solutions and services. Its offerings span client computing devices (consumer and commercial laptops and desktops), enterprise infrastructure (servers, storage systems and networking equipment), software and cloud infrastructure, and a variety of professional services such as IT consulting, deployment, managed services and financing solutions. The company serves organizations of all sizes as well as individual consumers, with products and services aimed at enabling digital transformation and modern IT environments.

Founded by Michael Dell in 1984, the company grew from a direct-to-consumer PC business into a diversified IT provider through organic expansion and strategic acquisitions.

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