Detailed performance report for DELL TECHNOLOGIES C covering Q2 2026. Gain clarity on earnings, revenue trends, and AI-enhanced strategic analysis.
Summary of Financial Performance: Dell reported a record quarter with revenue of $47.0 billion, up 58% YoY, and diluted non-GAAP EPS of $7.04, up 203%. Gross margin dollars rose 78% to $9.9 billion, gross margin rate was 21.1%, operating income increased 160% to $5.9 billion, and operating margin reached 12.6%. Cash flow was also strong, with $2.2 billion in operating cash flow and $8.1 billion in adjusted free cash flow. Shareholder returns hit a record $4.3 billion in the quarter.
Company Outlook & Strategy: Management raised full-year guidance and said momentum is expected to strengthen in the second half. FY27 revenue guidance was raised to $192 billion midpoint and EPS to $25.50 midpoint. Q3 revenue is guided to $49 billion midpoint, with AI server revenue of about $19 billion. Dell continues to focus on modernization, operating leverage, and broadening its AI and infrastructure leadership. Executives emphasized that the company is compounding benefits from its portfolio breadth, supply chain scale, and disciplined execution.
Key Industry Trends: Demand is being driven by data center modernization, AI adoption, and customers shifting IT from cost centers to growth enablers. AI is accelerating needs not only for AI servers but also for traditional servers, networking, and storage due to disaggregated architectures and data growth. Customers are increasingly considering on-prem and edge deployments for performance, cost, control, and security reasons. Traditional server refresh and storage modernization remain strong across enterprises.
Operational Highlights: ISG revenue rose 89% to $31.8 billion, with AI server orders of $60.9 billion, AI revenue of $16.4 billion, and AI backlog of $95 billion. Traditional server and networking revenue increased 122% to $10.5 billion, and storage revenue grew 26% to $4.9 billion with Dell IP storage demand above market for a sixth straight quarter. CSG revenue grew 20% to $15 billion, led by commercial growth. OpEx fell to 8.5% of revenue, with full-year OpEx guidance at about 8%, the lowest in company history, reflecting strong operating leverage and efficiency gains. Dell also returned capital via buybacks and dividends and ended with $14.2 billion in cash and investments.
Challenges & Risks: Management noted demand continues to exceed available supply, so balancing supply with demand remains important. In CSG, some cost-sensitive customers are extending PC upgrade cycles, which may moderate near-term demand. AI-related growth is also creating execution complexity, with highly customized deployments requiring significant engineering and deployment capabilities. The company noted that some exceptionally favorable margin factors this quarter may not fully repeat, though structural improvements remain.
Key Analyst Questions & Responses: No analyst Q&A content was included in the provided transcript, so no specific questions or responses were available to summarize.
Access the official earnings call transcript for DELL-TECHNOLOGIES-C 2026 Q2. It provides valuable insights into management commentary, performance drivers, and forward-looking guidance directly from the company.