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Dell Technologies Inc. (DELL) Q2 2026 Earnings Summary

Executive Summary

  • Dell delivered record Q2 FY26 revenue of $29.78B (+19% YoY) and record non-GAAP EPS of $2.32 (+19% YoY), with GAAP EPS of $1.70 (+38% YoY) .
  • Results were modestly above Wall Street consensus: revenue $29.19B* vs actual $29.78B and EPS $2.29* vs actual $2.32; EBITDA was below consensus ($2.97B* vs actual $2.74B*). Values retrieved from S&P Global.
  • Management raised FY26 revenue guidance to $105–$109B (midpoint $107B) and non-GAAP EPS to $9.55 ± $0.25, and lifted AI server shipment guidance by $5B to $20B for FY26 .
  • Gross margin rate compressed on AI mix (GM 18.3%, −310 bps YoY), but management guided margin improvement in H2 driven by higher storage mix, value engineering, and fading one-time supply chain expedite costs .

What Went Well and What Went Wrong

What Went Well

  • Record ISG revenue ($16.80B, +44% YoY) driven by Servers & Networking ($12.94B, +69% YoY); ISG operating income up 14% to $1.47B .
  • AI momentum: $8.2B AI server shipments in Q2, $10B shipped in H1; FY26 AI shipment guide raised to $20B with backlog of $11.7B and strong enterprise/sovereign pipeline growth .
  • Cash generation and capital returns: CFOA $2.54B in Q2; $1.3B returned via buybacks/dividends; 8M shares repurchased at $114; dividend ~$0.53/share; cash & investments $9.8B .

What Went Wrong

  • Gross margin rate fell to 18.3% (from 21.4% YoY) on AI mix; ISG margin rate down to 8.8% (from 11.0%) despite dollar growth .
  • Storage revenue declined 3% to $3.86B; large-account demand softness in North America and HCI customers re-evaluating private cloud architectures .
  • Traditional servers saw demand weakness in North America; federal spending down; consumer revenue −7% YoY to $1.72B amid promotional environment .

Financial Results

MetricQ4 FY25Q1 FY26Q2 FY26
Revenue ($USD Billions)$23.93 $23.38 $29.78
GAAP EPS ($)$2.15 $1.37 $1.70
Non-GAAP EPS ($)$2.68 $1.55 $2.32
Gross Margin % (GAAP)23.7% 21.1% 18.3%
Operating Margin % (GAAP)9.0% 5.0% 6.0%
Non-GAAP Operating Margin %11.2% 7.1% 7.7%

Segment breakdown

SegmentQ4 FY25 Revenue ($B)Q1 FY26 Revenue ($B)Q2 FY26 Revenue ($B)Q4 FY25 Op Inc ($B)Q1 FY26 Op Inc ($B)Q2 FY26 Op Inc ($B)
ISG Total$11.35 $10.32 $16.80 $2.05 $1.00 $1.47
Servers & Networking$6.63 $6.32 $12.94 ———
Storage$4.72 $4.00 $3.86 ———
CSG Total$11.88 $12.51 $12.50 $0.63 $0.65 $0.80
Commercial$10.00 $11.05 $10.78 ———
Consumer$1.89 $1.46 $1.72 ———

KPIs

KPIQ4 FY25Q1 FY26Q2 FY26
AI Server Orders ($B)$1.7 $12.1 $5.6
AI Server Shipments ($B)$2.1 $1.8 $8.2
AI Backlog ($B)~$9.0 (Feb) $14.4 $11.7
Cash Flow from Operations ($B)$0.59 $2.80 $2.54
Adjusted Free Cash Flow ($B)$0.47 $2.23 $2.52

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($B)Q3 FY26—$26.5–$27.5 (mid $27.0) New
Non-GAAP EPS ($)Q3 FY26—$2.45 ± $0.10 New
Diluted Share Count (mm)Q3 FY26—~681 New
Revenue ($B)FY26$101–$105 (mid $103) $105–$109 (mid $107) Raised
Non-GAAP EPS ($)FY26$9.40 ± $0.25 $9.55 ± $0.25 Raised
GAAP EPS ($)FY26$7.99 mid $7.98 mid Maintained ~flat
AI Server Shipments ($B)FY26≥$15 $20 Raised
ISG GrowthFY26High teens Mid–high 20s Raised
Storage GrowthFY26Low single digits Flat Lowered
CSG GrowthFY26Low–mid single digits Low–mid single digits Maintained
Operating ExpenseFY26Down low single digits Down low single digits Maintained
Operating IncomeFY26Up ~9% Up ~10% Raised
Interest & Other ($B)FY26$1.4–$1.5 $1.4–$1.5 Maintained
Non-GAAP Tax RateFY2618% 18% Maintained
Dividend/Share ($)Quarterly$0.525 (declared) $0.525 (Sep 4) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY25, Q1 FY26)Current Period (Q2 FY26)Trend
AI server margin and mixAI servers are dollar-accretive, rate-dilutive; Blackwell margins lower than Hopper; plan to improve via engineering and attach AI shipments nearly half ISG revenue; mix diluted rates; margin improvement expected H2 via value engineering, enterprise attach; one-time expedite costs in Q2 to fade Improving margin trajectory in H2
Supply chain/tariffsNavigating tariffs; did not raise prices; deflationary input costs in Q1; dynamic environment Deflationary input costs in Q2; one-time supply chain expedite cost in Q2; expect cost pressures to flatten in H2 Stabilizing costs
Traditional server consolidation5–6 quarters of YoY demand growth; TRUs up; consolidation reduces unit count but raises content North America demand weak; guidance calls for growth in H2; TRUs up; ASPs rising Mixed: regional weakness, global growth
Storage (Dell IP vs HCI)Pivot to Dell IP; strong PowerStore/PowerScale; secular decline in some areas; attach opportunity with AI Storage −3% YoY; Dell IP expected to outperform; HCI rethink headwind; better sequentials in H2/Q4 Near-term headwind, improving H2
PC refresh/AI PCsLagging refresh; expectations for FY26 back-half; commercial strength; Windows 10 end-of-life as catalyst Continued momentum; launch of entry-level business notebook; Windows 10 EOL in 48 days; plan to gain share within 5–7% op margin range Building toward refresh
Enterprise AI adoptionGrowing enterprise buyer base; attach services/storage/networking focus Enterprise demand up significantly; ~6,700 unique customers in pipeline; strong RTX Pro solutions interest Accelerating

Management Commentary

  • “We had a strong operational execution in the second quarter with record AI shipments. Our revenue was a record $29,800,000,000 up 19%… EPS increased by 19% to $2.32” .
  • “We booked $5,600,000,000 in orders in the second quarter and shipped a record $8,200,000,000 resulting in an ending backlog of $11,700,000,000” .
  • “We are raising our AI server shipment guidance $5,000,000,000 to $20,000,000,000 with shipments slightly weighted to the third quarter” .
  • “Given that backdrop, we expect Q3 revenue to be between $26,500,000,000 and $27,500,000,000… and diluted non GAAP EPS is expected to be $2.45 plus or minus $0.10” .
  • “We saw a significant shift in our mix to AI as the team executed very well and drove record AI shipments… we expect our AI margin rates to improve in the second half” .
  • “The cost that we incurred in Q2 to expedite material… and reconfiguring our supply chain… was a one time cost in Q2 that I don’t expect to incur in Q3 and Q4” .

Q&A Highlights

  • AI guide and margins: Management detailed path to higher AI margins via value engineering, scaling, and enterprise attach; noted Q2 one-time supply chain costs and competitive early Blackwell deals; expect H2 improvement .
  • Storage dynamics: Large-account demand softness in North America; HCI customers reassessing private cloud, offset by strength in Dell IP (PowerStore, PowerScale) and expected better-than-normal Q3 sequentials .
  • Regional/server demand: North America traditional server demand challenged; other regions grew; federal spending down; consolidation continues with higher content and ASPs .
  • Pipeline composition: Sovereign and enterprise portions grew double digits; ~6,700 unique customers; pipeline predominantly Blackwell with growing PCIe options .
  • Profitability trajectory: Storage seasonality and Dell IP mix drive expected Q4 step-up; OpEx down low single digits; overall second-half profitability improvement .

Estimates Context

  • Q2 FY26 vs Consensus: Revenue $29.19B* estimate vs $29.78B actual; EPS $2.29* estimate vs $2.32 actual; EBITDA $2.97B* estimate vs $2.74B* actual. Values retrieved from S&P Global.
  • Forward consensus: Q3 FY26 revenue $27.29B*, EPS $2.48*; FY26 EPS $9.55* in line with raised guidance midpoint $9.55 . Values retrieved from S&P Global.
MetricQ2 FY26 ConsensusQ2 FY26 ActualQ3 FY26 ConsensusFY26 Consensus
Revenue ($B)29.19*29.78 27.29*107.99*
EPS ($)2.29*2.32 2.48*9.55*
EBITDA ($B)2.97*2.74*3.06*11.90*
# of Revenue Estimates18*—20*23*
# of EPS Estimates19*—22*24*

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Q2 beat vs consensus on revenue and EPS with record AI shipments; near-term margin dilution from mix, but H2 margin improvement expected on storage seasonality and value engineering .
  • AI shipment guide raised to $20B for FY26; pipeline breadth (enterprise/sovereign) and GB300 transitions underpin visibility; watch pace of enterprise attach for margins .
  • Storage flat for FY26 vs prior low-single-digit growth view; near-term headwinds from HCI pause, offset by Dell IP wins (PowerStore/PowerScale); Q4 seasonal boost likely .
  • Traditional servers saw NA weakness; consolidation trend continues globally with higher content and ASPs; monitor federal demand and NA recovery .
  • PC refresh narrative intact (Windows 10 EOL as catalyst); management focused on share gains within 5–7% long-term CSG margin range .
  • Capital returns remain robust (dividend maintained, buybacks ongoing) and balance sheet liquidity increased; diluted share count guided ~681M for Q3 .
  • Trading implication: Near term, mix-driven margin pressure vs strong top-line; medium term, improved profitability in Q4 and elevated AI shipments could re-rate if enterprise attach accelerates and storage mix recovers .
Notes: All non-estimate figures sourced from company filings and transcripts as cited. Estimate figures marked with * are Values retrieved from S&P Global.

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