Dell Technologies Stock Down Despite Strong Q2 Earnings and Raised Guidance

Dell Technologies reported record revenue of $29.8 billion, up 19% YoY, and raised its guidance for fiscal 2026. The company expects adjusted earnings to jump 17% to $9.55 per share and revenue to grow 12% to $107 billion. Dell shipped a record $8.2 billion worth of AI servers in Q2 and received fresh orders worth $5.6 billion. The AI server order backlog stands at $11.7 billion, and the company expects to finish the year with $20 billion in AI server revenue, which is double the previous year's revenue.

Dell Technologies reported a record revenue of $29.8 billion for Q2 FY2026, marking a 19% year-over-year (YoY) increase. The company's guidance for fiscal 2026 has been raised to adjusted earnings of $9.55 per share, representing a 17% increase, and revenue growth of 12% to $107 billion [1]. Notably, Dell shipped a record $8.2 billion worth of AI servers in Q2, receiving fresh orders worth $5.6 billion. The AI server order backlog stands at $11.7 billion, and the company expects to finish the year with $20 billion in AI server revenue, which is double the previous year's revenue [2].

However, despite these strong results, Dell's forward-looking guidance for Q3 EPS was below consensus, which triggered a share price dip. Investors remain cautious about Dell’s ability to sustain accelerated earnings growth in H2 FY26. Many focus on flat shipment guidance (~$20 billion for FY26), interpreting Q3 softness as a sign of limited upside rather than seasonal or strategic factors [1]. The market remains skeptical about Dell’s ability to realize the full backlog in AI-related servers, despite the company’s record orders and growing pipeline.

Dell trades at a relatively low valuation versus peers, with analysts indicating up to 34% upside due to continuing double-digit earnings growth, robust AI infrastructure demand, and expanding margins [1]. Risks such as supply chain constraints, margin pressure, and competition from cloud vendors still moderate investor enthusiasm.

Outlook for H2 FY26
Dell is projected to deliver stronger results in Q4 due to seasonal trends and storage business demand. Analysts remain bullish with raised price targets, expecting Dell to capitalize on AI and data center infrastructure cycles in the coming quarters [1].

Dell’s combination of strong financial performance, sector-leading AI shipments, and conservative guidance create a compelling upside case—yet investor sentiment remains cautious, leading to undervaluation in the near term.

References:
[1] https://www.communicationstoday.co.in/dell-outperforms-in-q2-fy2026-why-its-true-upside-is-still-unrecognized/
[2] https://www.ainvest.com/news/dell-technologies-dividend-growth-long-term-creation-ai-era-2509/