Earnings Recap — Q2 FY2027
CY Q3 2026 · Reported September 1, 2026 · Beat 6 of last 7 quarters
Dell Technologies Inc. reported Q2 FY2027 revenue of $46.97B, a beat of 4.6% against consensus, and EPS of $7.04, a beat of 43.4%.
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Dell's record AI orders and backlog, along with triple-digit growth in traditional servers, underscore the accelerating pace of AI infrastructure buildout and the broadening demand beyond pure GPU clusters to supporting compute, storage, and networking. The company's ability to raise full-year guidance by $25 billion reflects its central role in scaling AI data centers, particularly for neoclouds, sovereigns, and enterprises, and signals continued robust demand for AI-optimized infrastructure components and services.
Dell delivered record revenue of $47 billion, up 58% year-over-year, and record EPS of $7.04, up 203%. ISG revenue grew 89% to a record $31.8 billion, with AI server revenue of $16.4 billion, traditional server and networking revenue up 122% to $10.5 billion, and storage revenue up 26% to $4.9 billion. CSG revenue grew 20% to $15 billion, with commercial revenue up 22%. The company booked a record $60.9 billion in AI orders, ending backlog reached $95 billion, and customer count surpassed 6,500. Cash flow from operations was $2.2 billion, and the company returned a record $4.3 billion to shareholders.
Management raised full-year revenue guidance by $25 billion to $192 billion at the midpoint, up roughly 70% year-over-year, and raised EPS guidance to $25.50, up approximately 150%. They expect second-half revenue to be stronger than the first half, with Q3 revenue guided to $49 billion, up roughly 80% year-over-year. ISG is expected to grow roughly 145% in Q3, supported by $19 billion in AI server revenue, while CSG is expected to grow roughly 15%. Full-year AI server revenue is now expected to triple to $74 billion, with traditional servers growing just over 100%, storage up mid-teens, and CSG up mid-teens. Management highlighted continued operating leverage, with full-year operating expense rate expected at approximately 8% of revenue, the lowest in company history, and reiterated that demand continues to outpace supply.
“Another outstanding quarter. I'm proud of how our team executed across the business, delivering record revenue and record earnings per share.”
on Q2 performance
“In Q2, we booked a record $60.9 billion in AI orders and recognized $16.4 billion in AI server revenue. We exited the quarter with a record $95 billion of AI backlog, and our pipeline continued to grow sequentially and remains multiples of our backlog even after converting $131.7 billion into orders over the past 12 months.”
on AI demand
“Our full year operating expense rate guidance of approximately 8% of revenue is the lowest in our company's 42-year history, demonstrates the operating leverage this model can deliver.”
on Operating leverage
Can you spend some time talking about what is driving the traditional server and storage demand, and is there a way to think about pricing versus demand versus share gains?
Jeffrey Clarke attributed traditional server growth to data center modernization, consolidation, and an aging installed base, with 1.2 million assets still on 14G or older. He noted security requirements and agentic AI workloads as incremental demand drivers. Storage growth was driven by data growth and competitive Dell IP products, with PowerStore growing double digits for 10 consecutive quarters. David Kennedy added that second-half growth rates are expected to maintain first-half levels, indicating durability.
Should Dell grow in line with NVIDIA next year given the strong backlog and CPU rack additions?
David Kennedy highlighted the second-half trajectory and durability of demand across the portfolio, noting second-half growth of 68% mirrors first-half growth of 71%. Jeffrey Clarke added that the 5-quarter pipeline grew sequentially even after booking $131.7 billion in orders, and cited long-term drivers including agentic AI, inference token growth, and a $1 trillion addressable opportunity by 2030.
Is the traditional server category still almost all enterprise, and what is the customer mix in AI servers?
Jeffrey Clarke said traditional server growth is primarily from historical enterprise customers, with demand outstripping supply. AI server demand is broadening across neoclouds, sovereigns, and enterprises, with customer count surpassing 6,500. Enterprise customers grew quarter-over-quarter and year-over-year, and repeat buyers increased, though the mix didn't change significantly due to continued wins in sovereign and neocloud segments.