Dell Technologies 2026 Q1 Earnings Mixed Results as Net Income Falls 2.7%

Dell Technologies (DELL), ranking 181st by market capitalization reported its fiscal 2026 Q1 earnings on May 29th, 2025. The company exceeded revenue expectations with $23.38 billion, surpassing the forecast of $23.14 billion. However, earnings per share (EPS) of $1.41 fell short compared to the anticipated $1.69. Dell raised its annual earnings outlook, projecting $9.40 per share, and set a strong revenue guidance for Q2 between $28.5 billion and $29.5 billion, ahead of the $25.26 billion consensus estimate.

Revenue

Dell Technologies' total revenue for 2026 Q1 saw a 5.1% increase to $23.38 billion, compared to $22.24 billion in the same quarter of 2025. The Infrastructure Solutions Group contributed $10.32 billion, while the Client Solutions Group generated $12.51 billion. Revenue from Corporate and other segments was $552 million. With strong performance across its segments, total consolidated net revenue reached $23.38 billion.

Earnings/Net Income

Dell Technologies reported an increase in EPS of 0.5% to $1.41 in 2026 Q1 from $1.40 in 2025 Q1, indicating ongoing earnings growth, albeit modest. However, the company's net income declined by 2.7% to $965 million from the previous year's $992 million. Despite the slight rise in EPS, the shrinking net income suggests a need for further financial improvement.

Post-Earnings Price Action Review

The strategy of purchasing Dell stock following a revenue miss and holding for 30 days has historically shown significant performance, yielding a 398.62% return with a compound annual growth rate (CAGR) of 38.18%. However, this strategy carries substantial risk, as evidenced by a maximum drawdown of -60.31%. The Sharpe ratio of 0.80 reflects the moderate balance of risk and return. Such historical data highlights the potential volatility in investing strategies, emphasizing the importance of risk assessment. Although the strategy can offer high returns, the inherent risks require careful consideration by investors.

CEO Commentary

Jeff Clarke, Vice Chairman and COO, stated that Dell achieved growth across its core markets with revenue of $23.4 billion, up 5%, and earnings per share increased by 17% to $1.55. He highlighted unprecedented demand for AI-optimized servers, with orders reaching $12.1 billion, surpassing all of FY 2025 shipments. Clarke emphasized the importance of innovation and agile responses to evolving architectures, asserting that Dell's ecosystem and partnerships position the company strongly in the AI market. He conveyed confidence in their ability to execute, stating, "We're leading in AI and pushing the boundaries of innovation," while acknowledging the complexity and variability of demand in the AI sector.

Guidance

For Q2, Dell expects revenue between $28.5 billion and $29.5 billion, with ISG and CSG anticipated to grow 19% at the midpoint. The diluted non-GAAP EPS is projected to be $2.25, up 15%. For FY 2026, Dell reiterates revenue guidance of $101 billion to $105 billion, with ISG expected to grow in the high teens, driven by over $15 billion in AI server shipments. Operating income is anticipated to increase by roughly 9%, and diluted non-GAAP EPS guidance is raised to $9.40, plus or minus $0.25, reflecting confidence in their business execution and AI market leadership.

Additional News

Dell Technologies announced a significant share repurchase and dividend initiative, allocating $2.4 billion towards these efforts in the latest quarter. This move reflects the company’s commitment to returning value to shareholders and boosting investor confidence. Additionally, Dell's recent unveiling of advanced AI infrastructure solutions at its annual customer event has positioned it as a leader in the AI market. The company showcased next-generation products, including Nvidia-powered servers, aimed at enhancing enterprise AI deployments. Furthermore, Dell has strengthened its executive team by appointing a new Chief Technology Officer, emphasizing its focus on innovation and strategic growth in the rapidly evolving technology landscape.