Dell Q2 Earnings Beat Estimates, AI Server Sales to Double in Fiscal 2026

Dell reported Q2 earnings that beat Wall Street expectations for sales and revenue, driven by strong growth in its AI server business. The company now plans to ship $20 bln of AI servers in FY26, double last year's sales. Revenue rose 19% YoY, with servers and networking revenue up 69% to $12.9 bln. Dell raised its full-year outlook for revenue to $107 bln and diluted EPS to $9.55.

Dell Technologies (DELL) reported its second-quarter fiscal 2026 results, which exceeded Wall Street expectations for both sales and revenue. The company's AI server business has been a significant driver of growth, with revenue from this segment showing robust performance. According to the earnings report, revenue rose by 19% year-over-year (YoY), reaching $29.1 billion, while non-GAAP earnings per share (EPS) came in at $2.28, surpassing the Zacks Consensus Estimate of $2.31 per share [1].

The company's Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG) both contributed to the strong performance. ISG, which includes servers, storage, and networking, saw a 19% growth at the midpoint, while CSG, which focuses on traditional PC and laptop business, grew significantly. The ISG segment saw a 27% YoY growth in revenue, reaching $15.955 billion, while CSG revenue increased by 3.86% to $12.894 billion [1].

One of the key factors driving this growth was the robust demand for AI-optimized servers, which has been fueled by ongoing digital transformation and heightened interest in generative AI applications. Dell's AI server momentum continued into the second quarter, with the company reporting $12.1 billion in AI server orders in the first quarter of fiscal 2026. The AI server backlog remained healthy at $14.4 billion, indicating strong demand for the company's AI infrastructure solutions [1].

Dell Technologies also benefited from a growing partner network, including collaborations with NVIDIA, Lowe's Companies, and Microsoft. These partnerships have driven growth by enhancing AI capabilities and optimizing various business operations. For instance, Dell's partnership with NVIDIA has been instrumental in the development of the PowerEdge 9680, a high-performance AI server [1].

The company's strong performance in AI servers has been reflected in its stock price, which has rallied 13.7% year-to-date compared to the broader Zacks Computer & Technology sector's return of 12.5%. However, the challenging macroeconomic environment and tariff-related uncertainties continue to pose risks for the company [1].

Looking ahead, Dell Technologies has raised its full-year revenue outlook to $107 billion and its diluted EPS to $9.55. The company plans to ship $20 billion worth of AI servers in fiscal 2026, doubling last year's sales. This significant growth in AI server sales highlights Dell's commitment to leveraging AI technology to drive future growth [1].

References:
[1] https://finance.yahoo.com/news/dell-set-report-q2-earnings-180000994.html
[2] https://www.tastylive.com/news-insights/dell-q2-earnings-preview-ai-orders-surge-but-profitability-is-the-test