Dell Revenue Jumps 19% in Fiscal Q2
Key Points
Record GAAP revenue jumped 19% to $29.8 billion, driven by a surge in AI server shipments within ISG.
Non-GAAP earnings per share rose 19% to $2.32.
Full-year FY2026 revenue and AI server shipment guidance were raised as management signaled continued AI demand.
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Dell Technologies (NYSE:DELL), a global leader in IT infrastructure and personal computing solutions, reported financial results for Q2 FY2026 on August 28, 2025. The company announced record GAAP revenue of $29.8 billion, up 19%, outpacing analyst estimates (non-GAAP) and the company’s own prior midpoint guidance of $29.0 billion. Non-GAAP earnings per share rose to $2.32, a 19% increase over the same period last year and above the prior guidance range. The standout was the company’s Infrastructure Solutions Group, where sharp growth in AI-optimized servers set new records. Despite margin pressures, Dell raised its full-year outlook, signaling confidence in continued momentum fueled by AI demand.
| Metric | Q2 FY26(Three Months Ended August 1, 2025) | Q2 FY25(Three Months Ended August 2, 2024) | Y/Y Change |
|---|---|---|---|
| EPS (Non-GAAP) | $2.32 | $1.95 | 19 % |
| Revenue | $29.8 billion | $25.0 billion | 19 % |
| Operating Income (Non-GAAP) | $2.3 billion | $2.08 billion | 11 % |
| Free Cash Flow (Non-GAAP) | $1.9 billion | $1.28 billion | 48 % |
| ISG Revenue | $16.8 billion | $11.6 billion | 44 % |
Business Overview and Key Success Factors
Dell Technologies is a global provider of technology solutions focused on IT infrastructure, servers, enterprise storage, and personal computers. Its two major operating segments are the Infrastructure Solutions Group (ISG), which covers servers, storage, and networking, and the Client Solutions Group (CSG), which includes commercial and consumer PCs plus related services.
The company's recent strategy emphasizes the fast-growing fields of artificial intelligence (AI) infrastructure, hybrid cloud deployments, and new as-a-Service models for buying technology. Key factors critical to Dell’s ongoing success are its scale, global reach in over 170 countries, ongoing investment in research and development, flexible payment solutions, and a broad portfolio that provides both recurring and transactional revenue streams.
Quarterly Highlights: AI Drives Growth, Mixed Performance Elsewhere
The second quarter showed a shift in Dell’s business mix, with the ISG segment delivering record revenue due to demand for AI servers. Revenue in ISG (GAAP) reached $16.8 billion, a 44% rise from the prior year, sharply accelerating from recent quarters. Servers and Networking sales, which make up the bulk of ISG, climbed 69% as customers continued building AI-enabled data centers. Management reported $10 billion in AI solution shipments in the first half of FY2026, already surpassing the full prior year.
AI-driven growth did not fully carry over into all areas. Storage business revenue fell 3% to $3.9 billion (GAAP), reversing its recent streak of quarterly gains. The company has pointed to the “attach” opportunity—selling storage alongside big AI infrastructure deals—but this connection has not yet delivered higher storage sales. Operating margins in ISG also dropped from 11.0% to 8.8%.
Client Solutions Group results were mixed. CSG revenue edged up just 1% to $12.5 billion (GAAP). Commercial PC revenue rose 2%, while consumer PC revenue declined 7%. causing operating margins in CSG to compress from 6.6% to 6.4% compared to Q2 FY2025.
The company generated robust adjusted free cash flow of $2.5 billion, up 96% from the prior year, and returned $1.3 billion to shareholders through buybacks and dividends. Gross margin, the portion of revenue left after direct costs, increased in total dollars but declined as a percentage of sales, reflecting a greater share of lower-margin AI hardware and weaker pricing in legacy businesses.
Outlook and Investor Considerations
Looking ahead, management raised the full-year FY2026 revenue forecast to between $105.0 and $109.0 billion, with a midpoint that is $4.0 billion higher than its previous full-year revenue guidance midpoint. The midpoint for non-GAAP earnings per share is now $9.55, up from the prior guidance of $9.40 non-GAAP. For Q3 FY2026, revenue is expected to be $26.5–$27.5 billion, and non-GAAP EPS is projected at $2.45. Dell also increased its full-year AI server shipment target to $20 billion, up from $15 billion after seeing outsized demand through the first half of the year.
Investors should monitor a few important dynamics as Dell’s business mix evolves. Rapid growth in AI servers is fueling revenue gains, but also compressing margins for now. The company’s ability to realize more storage and recurring services sales from its AI customer base will be important for long-term profitability. The continued slide in consumer PC demand and the pace of further commercial PC upgrades are also critical trends to watch, as is the durability of the current wave of AI infrastructure spending. No change was disclosed during the period.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
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