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DELL Q2 Earnings Beat Estimates, Revenues Up Y/Y, Shares Fall
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Key Takeaways
Dell posted Q2 EPS of $2.32 and revenue of $29.78B, both topping estimates.
AI server shipments hit $10B, with backlog holding at a strong $11.7B.
ISG revenue soared 44% to $16.8B, fueled by 69% growth in servers and networking.
Dell Technologies (DELL - Free Report) reported non-GAAP earnings of $2.32 per share in the second quarter of fiscal 2026, beating the Zacks Consensus Estimate by 0.43%. The bottom line increased 19% year over year.
Revenues increased 19% year over year to $29.78 billion and surpassed the consensus mark by 1.56%. The rise was primarily driven by record AI server shipments.
After the results were announced, shares of DELL lost 6.17% in pre-market trading.
DELL’s Q2 Top-Line Details
Product revenues rose 26% year over year to $23.9 billion, beating the Zacks Consensus Estimate by 11.35%.
Dell Technologies Inc. Price, Consensus and EPS Surprise
Services revenues declined 4% year over year to $5.84 billion, missing the Zacks Consensus Estimate by 22.66%.
Infrastructure Solutions Group (ISG) revenues increased 44% year over year to $16.80 billion.
The upside can be attributed to servers and networking revenues of 12.94 billion, which grew 69% year over year, with demand strength across AI and traditional servers. Storage revenues decreased 3% year over year to $3.85 billion.
In the reported quarter, Dell Technologies’ AI-optimized server momentum saw an increase of $5.6 billion in orders. The flagship PowerEdge XE9680 experienced strong demand, contributing to the momentum in the AI space.
Dell Technologies shipped $10 billion worth of AI servers in the fiscal second quarter, and the AI server backlog remained healthy at $11.7 billion.
CSG revenues were $12.50 billion, up 1% year over year. Commercial Client revenues increased 2% year over year to $10.78 billion, while Consumer revenues fell 7% to $1.72 billion.
DELL’s Operating Details
The company’s fiscal second-quarter non-GAAP gross profit increased 1% year over year to $5.57 billion. The gross margin contracted 330 basis points (bps) year over year to 18.7%.
SG&A expenses fell 9% year over year to $2.88 billion. Research and development expenses increased 1% year over year to $785 million in the reported quarter.
Non-GAAP operating expenses declined 4% year over year to $3.28 billion. Operating expenses, as a percentage of revenues, contracted 270 bps on a year-over-year basis to 11%.
The non-GAAP operating income was $2.28 million, up 10% year over year. The operating margin contracted 60 bps year over year to 7.7%.
The ISG segment’s operating income jumped 14% year over year to $1.47 billion. The CSG segment’s operating income was $803 million, down 2% year over year.
DELL’s Balance Sheet & Cash Flow Details
As of Aug. 1, 2025, DELL had $8.14 billion in cash and cash equivalents compared with $7.70 billion as of May 2, 2025.
Total debt was $28.68 billion as of Aug. 1, 2025, compared with $28.78 billion as of May 2, 2025.
The company generated cash flow from operations of $2.5 billion. The adjusted free cash flow was $2.51 billion in the second quarter of fiscal 2026.
In the second quarter of fiscal 2026, Dell Technologies returned $1.3 billion of capital to its shareholders.
DELL’s Q3 & FY26 Guidance
For the third quarter of fiscal 2026, revenues are expected to be between $26.5 billion and $27.5 billion, with the mid-point of $27 billion suggesting 11% year-over-year growth.
For the fiscal third quarter, Dell Technologies anticipates 13% growth at the midpoint for the combined ISG and CSG, with ISG growing in the low-twenties and CSG growing in the mid-single digits.
Non-GAAP earnings are expected to be $2.45 per share (+/- 10 cents), at the midpoint, indicating 11% growth year over year.
For fiscal 2026, revenues are expected to be between $105 billion and $109 billion, with the mid-point of $107 billion indicating 12% year-over-year growth.
For fiscal 2026, Dell Technologies anticipates 14% growth at the mid-point for ISG and CSG combined, with ISG expected to increase in the mid-to-high twenties, with storage flat and CSG likely to grow in the low to mid-single digits.
Non-GAAP earnings are expected to be $9.55 per share (+/- 25 cents), at the midpoint, up 17% year over year.
Zacks Rank & Stocks to Consider
Dell Technologies has a Zacks Rank #3 (Hold) at present.
Alkami Technology shares have lost 29.9% year to date. The Zacks Consensus Estimate for Alkami Technology’s full-year 2025 earnings is pegged at 58 cents per share, up by 7.4% over the past 30 days, implying growth of 100% from the year-ago quarter’s reported figure.
Arista Networks shares have gained 23.2% year to date. The Zacks Consensus Estimate for ANET’s full-year fiscal 2025 earnings is pegged at $2.81 per share, up by 9.7% in the past 30 days, indicating year-over-year growth of 23.79%.
Amphenol shares have gained 61.2% year to date. The Zacks Consensus Estimate for Amphenol’s full-year 2025 earnings has increased 1.34% to $3.02 per share in the past 30 days, indicating year-over-year growth of 59.79%.
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DELL Q2 Earnings Beat Estimates, Revenues Up Y/Y, Shares Fall
Key Takeaways
Dell Technologies (DELL - Free Report) reported non-GAAP earnings of $2.32 per share in the second quarter of fiscal 2026, beating the Zacks Consensus Estimate by 0.43%. The bottom line increased 19% year over year.
Revenues increased 19% year over year to $29.78 billion and surpassed the consensus mark by 1.56%. The rise was primarily driven by record AI server shipments.
After the results were announced, shares of DELL lost 6.17% in pre-market trading.
DELL’s Q2 Top-Line Details
Product revenues rose 26% year over year to $23.9 billion, beating the Zacks Consensus Estimate by 11.35%.
Dell Technologies Inc. Price, Consensus and EPS Surprise
Dell Technologies Inc. price-consensus-eps-surprise-chart | Dell Technologies Inc. Quote
Services revenues declined 4% year over year to $5.84 billion, missing the Zacks Consensus Estimate by 22.66%.
Infrastructure Solutions Group (ISG) revenues increased 44% year over year to $16.80 billion.
The upside can be attributed to servers and networking revenues of 12.94 billion, which grew 69% year over year, with demand strength across AI and traditional servers. Storage revenues decreased 3% year over year to $3.85 billion.
In the reported quarter, Dell Technologies’ AI-optimized server momentum saw an increase of $5.6 billion in orders. The flagship PowerEdge XE9680 experienced strong demand, contributing to the momentum in the AI space.
Dell Technologies shipped $10 billion worth of AI servers in the fiscal second quarter, and the AI server backlog remained healthy at $11.7 billion.
CSG revenues were $12.50 billion, up 1% year over year. Commercial Client revenues increased 2% year over year to $10.78 billion, while Consumer revenues fell 7% to $1.72 billion.
DELL’s Operating Details
The company’s fiscal second-quarter non-GAAP gross profit increased 1% year over year to $5.57 billion. The gross margin contracted 330 basis points (bps) year over year to 18.7%.
SG&A expenses fell 9% year over year to $2.88 billion. Research and development expenses increased 1% year over year to $785 million in the reported quarter.
Non-GAAP operating expenses declined 4% year over year to $3.28 billion. Operating expenses, as a percentage of revenues, contracted 270 bps on a year-over-year basis to 11%.
The non-GAAP operating income was $2.28 million, up 10% year over year. The operating margin contracted 60 bps year over year to 7.7%.
The ISG segment’s operating income jumped 14% year over year to $1.47 billion. The CSG segment’s operating income was $803 million, down 2% year over year.
DELL’s Balance Sheet & Cash Flow Details
As of Aug. 1, 2025, DELL had $8.14 billion in cash and cash equivalents compared with $7.70 billion as of May 2, 2025.
Total debt was $28.68 billion as of Aug. 1, 2025, compared with $28.78 billion as of May 2, 2025.
The company generated cash flow from operations of $2.5 billion. The adjusted free cash flow was $2.51 billion in the second quarter of fiscal 2026.
In the second quarter of fiscal 2026, Dell Technologies returned $1.3 billion of capital to its shareholders.
DELL’s Q3 & FY26 Guidance
For the third quarter of fiscal 2026, revenues are expected to be between $26.5 billion and $27.5 billion, with the mid-point of $27 billion suggesting 11% year-over-year growth.
For the fiscal third quarter, Dell Technologies anticipates 13% growth at the midpoint for the combined ISG and CSG, with ISG growing in the low-twenties and CSG growing in the mid-single digits.
Non-GAAP earnings are expected to be $2.45 per share (+/- 10 cents), at the midpoint, indicating 11% growth year over year.
For fiscal 2026, revenues are expected to be between $105 billion and $109 billion, with the mid-point of $107 billion indicating 12% year-over-year growth.
For fiscal 2026, Dell Technologies anticipates 14% growth at the mid-point for ISG and CSG combined, with ISG expected to increase in the mid-to-high twenties, with storage flat and CSG likely to grow in the low to mid-single digits.
Non-GAAP earnings are expected to be $9.55 per share (+/- 25 cents), at the midpoint, up 17% year over year.
Zacks Rank & Stocks to Consider
Dell Technologies has a Zacks Rank #3 (Hold) at present.
Alkami Technology (ALKT - Free Report) , Arista Networks (ANET - Free Report) , and Amphenol (APH - Free Report) are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. While ANET and ALKT carry a Zacks Rank #2 (Buy), APH sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Alkami Technology shares have lost 29.9% year to date. The Zacks Consensus Estimate for Alkami Technology’s full-year 2025 earnings is pegged at 58 cents per share, up by 7.4% over the past 30 days, implying growth of 100% from the year-ago quarter’s reported figure.
Arista Networks shares have gained 23.2% year to date. The Zacks Consensus Estimate for ANET’s full-year fiscal 2025 earnings is pegged at $2.81 per share, up by 9.7% in the past 30 days, indicating year-over-year growth of 23.79%.
Amphenol shares have gained 61.2% year to date. The Zacks Consensus Estimate for Amphenol’s full-year 2025 earnings has increased 1.34% to $3.02 per share in the past 30 days, indicating year-over-year growth of 59.79%.