Dell Technologies Inc. (DELL) Q1 2026 Earnings Summary

Executive Summary

Revenue rose 5% year over year to $23.4B and non-GAAP EPS rose 17% to $1.55, with record Q1 cash from operations of $2.8B and $2.4B returned to shareholders .
Dell booked $12.1B in AI server orders and exited with a $14.4B backlog; servers and networking set a Q1 record at $6.3B, driving ISG operating income up 36% to $1.0B .
FY26 revenue guidance was maintained at $101–$105B while GAAP EPS midpoint was raised to $7.99 and non-GAAP EPS midpoint to $9.40; Q2 revenue guided to $28.5–$29.5B and non-GAAP EPS to $2.25 .
Versus consensus: revenue modestly beat, EPS missed (Q1 FY26 revenue $23.38B vs $23.19B*, EPS $1.55 vs $1.69*); stock narrative catalyst is accelerating AI pipeline/backlog and raised EPS guide despite CSG margin pressure .
Values with * retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well
- “We achieved first-quarter record servers and networking revenue of $6.3 billion… We generated $12.1 billion in AI orders… leaving us with $14.4 billion in backlog.” — Jeff Clarke .
- ISG revenue up 12% to $10.3B; ISG operating income up 36% to $1.0B (9.7% margin), supported by robust AI demand and improving storage margins .
- Record Q1 cash from operations of $2.8B; capital return of $2.4B via buybacks and dividends underscored capital allocation discipline .
What Went Wrong
- GAAP gross margin fell 80 bps to 21.1%, with CFO citing “a more competitive pricing environment, predominantly in CSG and geographical mix within traditional servers” .
- CSG consumer revenue declined 19% to $1.5B; CSG operating income fell 16% to $653M (5.2% margin) amid promotional consumer pricing and soft demand .
- Traditional servers saw a slowdown in North America late in the quarter; management guides sub-seasonal traditional server/storage in Q2 given dynamic macro and IT spend timing .

Financial Results

Metric (USD)	Q3 FY25	Q4 FY25	Q1 FY26
Revenue ($ Billions)	$24.366	$23.931	$23.378
GAAP Diluted EPS ($)	$1.58	$2.15	$1.37
Non-GAAP Diluted EPS ($)	$2.15	$2.68	$1.55
GAAP Gross Margin (%)	21.8%	23.7%	21.1%
GAAP Operating Margin (%)	6.8%	9.0%	5.0%
Non-GAAP Operating Margin (%)	9.0%	11.2%	7.1%

Results vs Wall Street consensus (S&P Global):

Q1 FY26 Revenue: Actual $23.378B vs Consensus $23.193B* — beat .
Q1 FY26 EPS: Actual $1.55 vs Consensus $1.69184* — miss.
Values with * retrieved from S&P Global.

Segment breakdown (Revenue and Operating Income):

Segment (USD)	Q3 FY25	Q4 FY25	Q1 FY26
ISG Servers & Networking Revenue ($ Billions)	$7.364	$6.634	$6.321
ISG Storage Revenue ($ Billions)	$4.004	$4.718	$3.996
ISG Total Revenue ($ Billions)	$11.368	$11.352	$10.317
ISG Operating Income ($ Billions)	$1.508	$2.051	$0.998
CSG Commercial Revenue ($ Billions)	$10.138	$9.996	$11.046
CSG Consumer Revenue ($ Billions)	$1.993	$1.885	$1.463
CSG Total Revenue ($ Billions)	$12.131	$11.881	$12.509
CSG Operating Income ($ Billions)	$0.694	$0.631	$0.653

KPIs (Q1 FY26):

KPI	Q1 FY26
AI Server Orders ($ Billions)	$12.1
AI Server Shipments ($ Billions)	$1.8
AI Server Backlog ($ Billions)	$14.4
Cash from Operations ($ Billions)	$2.796
Adjusted Free Cash Flow ($ Billions)	$2.232
Capital Returned ($ Billions)	$2.4
Shares Repurchased (Millions)	22.1 at ~$90 avg price
Quarterly Dividend per Share ($)	$0.525 (declared Jun 17)

Non-GAAP reconciliation note: Q1 FY26 non-GAAP EPS of $1.55 reflects exclusions including amortization of intangibles ($0.18), stock-based compensation ($0.27), other corporate items (−$0.08), fair value adjustments (−$0.02), and tax adjustment (−$0.17) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($ Billions)	FY26	$101–$105	$101–$105	Maintained
GAAP Diluted EPS ($)	FY26	$7.85 (midpoint)	$7.99 (midpoint)	Raised
Non-GAAP Diluted EPS ($)	FY26	$9.30 (midpoint)	$9.40 (midpoint)	Raised
Revenue ($ Billions)	Q2 FY26	—	$28.5–$29.5	New
GAAP Diluted EPS ($)	Q2 FY26	—	$1.85 (midpoint)	New
Non-GAAP Diluted EPS ($)	Q2 FY26	—	$2.25 (midpoint)	New
ISG AI Server Shipments ($ Billions)	FY26	~$15+ (AI server revenue shipments)	>$15 (reiterated; “15+”)	Maintained/affirmed
Operating Income (YoY)	FY26	—	Up ~9%	New detail
OpEx (YoY)	FY26	—	Down low single digits	New detail
Interest & Other (I&O) ($ Billions)	FY26	—	$1.4–$1.5	New detail
Non-GAAP Tax Rate (%)	FY26	—	18%	New detail
Diluted Share Count (Millions)	Q2 FY26	—	~685	New detail
Dividend per Share ($)	Quarterly	Raised 18% to $2.10 annual	$0.525 declared for Aug 1	Maintained cadence

Earnings Call Themes & Trends

Topic	Q3 FY25 (Nov 2024)	Q4 FY25 (Feb 2025)	Q1 FY26 (May 2025)	Trend
AI servers demand/backlog	Record AI server orders $3.6B; pipeline up >50%	Backlog ~$9B, deals booked incl. xAI	$12.1B orders; $14.4B backlog; pipeline multiples of backlog	Strong acceleration
Storage attach/services	Focus areas in Dell IP storage; growing storage revenue	Storage +5% in Q4; ISG margin record	Attach improving modestly; deployment/installation services attach strong; aim to raise storage/networking attach	Improving, room to expand
Supply chain execution	—	—	Supply chain as unique advantage; 24-hour rack turn-on target	Differentiator
Tariffs/macro	—	—	Tariff costs embedded in guide; input costs viewed deflationary; no list price increases	Managed; cautious macro
Traditional servers	Demand growth across AI & traditional	Q4 traditional strong	NA slowdown late in Q1; guides sub-seasonal traditional server/storage in Q2	Moderating
PC refresh/AIPCs	Commercial up 3%	Commercial up 5%	Commercial +9%; AIPC mix stabilizing ASPs; consumer −19%	Enterprise refresh building; consumer soft
Regulatory/control	—	Material weakness disclosed (supplier credits timing)	Continuing remediation; no incremental Q1 update in 8-K	Monitor remediation
R&D/AI portfolio	—	—	Expanded AI Factory: DL cooling, AI PCs, Project Lightning, partner ecosystem (Google/Cohere/AMD/Intel)	Rapid portfolio expansion

Management Commentary

“Non-GAAP EPS grew three times faster than revenue… We generated record first-quarter cash flow from operations of $2.8 billion and returned $2.4 billion to shareholders” — Yvonne McGill .
“We’re experiencing unprecedented demand for our AI-optimized servers… $12.1 billion in AI orders… $14.4 billion in backlog” — Jeff Clarke .
CFO detail: GAAP gross margin down 80 bps due to CSG pricing and geographic mix; non-GAAP operating margin 7.1% (up YoY) on higher revenue and lower OpEx .
“We expect to ship roughly $7 billion of AI servers” in Q2, ISG+CSG combined to grow ~19% at the midpoint; full-year revenue reiterated; non-GAAP EPS raised to $9.40 midpoint .
“Our supply chain is a unique advantage… we are reiterating our full year revenue guidance and raising our EPS guidance” — Jeff Clarke .

Q&A Highlights

AI shipments/backlog conversion: First half shipments ~$9B ($1.8B Q1 plus ~$7B Q2); backlog primarily Blackwell with some Hopper; enterprise orders growing faster than CSP .
Margin mix/attach: AI drives gross margin and operating income dollar accretion even as rates dilute; storage margins rising with Dell IP mix; services attach strong; networking/storage attach a priority to expand .
Tariffs/pricing: Tariffs fully embedded in Q2/year guide; input costs deflationary; no list price hikes; competitive dynamics steady; promotional consumer pricing persists .
Traditional servers: Late-quarter NA slowdown; expects sub-seasonal traditional server/storage in Q2; longer-term refresh opportunity as installed base upgrades from 14G to 16G/17G .

Estimates Context

Q1 FY26 vs consensus (S&P Global): Revenue $23.378B vs $23.193B* (beat), EPS $1.55 vs $1.69184* (miss). Management highlighted CSG pricing/geographic mix and late-quarter traditional server slowdown as headwinds offset by AI-driven ISG strength .
Values with * retrieved from S&P Global.

Key Takeaways for Investors

AI momentum remains the core driver: $12.1B orders and $14.4B backlog position ISG to deliver outsized revenue and EPS dollar growth despite rate dilution; Q2 AI shipments guided to ~$7B .
Mix shift implications: GAAP gross margin compressed 80 bps and CSG consumer softness (−19%) highlight ongoing promotional pressure; however, commercial PC refresh and AIPC mix are stabilizing ASPs .
Guidance quality: FY26 revenue maintained and EPS raised (GAAP midpoint $7.99; non-GAAP $9.40) with explicit I&O ($1.4–$1.5B) and tax (18%) assumptions — supports estimate stability .
Cash returns: Robust $2.8B CFO and $2.4B capital returned (22.1M shares at ~$90, $0.525 dividend declared) create buyback/dividend support through macro noise .
Near-term setup: Expect Q2 revenue acceleration (midpoint $29.0B) weighted to AI shipments, with sub-seasonal traditional server/storage; watch conversion of enterprise pipeline and storage/networking attach .
Execution/timing risks: Complex Blackwell deployments (power/cooling/liquid infrastructure) and customer facility readiness can make shipments nonlinear; Dell’s deployment speed and supply chain are differentiators .
Monitoring items: CSG consumer demand, NA traditional server trajectory, and remediation of prior-period supplier credit control weakness disclosed in Q4 FY25 .

Additional relevant press releases for context:

Dell AI Factory advancements (AI PCs, liquid cooling, Project Lightning, partner ecosystem with Google/Cohere/AMD/Intel) — expanding portfolio breadth across edge and data center .
Quarterly cash dividend declared at $0.525 per share (Aug 1 payable) following the 18% annual dividend increase approved in February .