Dell Technologies raised its full-year revenue and profit outlook after posting record fiscal Q2 FY2027 results, as runaway demand for AI-optimised servers pushed the company’s order backlog to an all-time high of $95 billion.
Key Takeaways
- Dell’s AI-optimised server backlog surged to a record $95 billion, nearly doubling from $51.3 billion the previous quarter, after the company booked record AI server orders of $60.9 billion in Q2 FY2027.
- Quarterly revenue rose 58% year-on-year to $47.0 billion, beating Wall Street estimates of roughly $44.9 billion; adjusted EPS of $7.04 jumped 203% YoY, well ahead of the ~$4.87 analysts had expected.
- AI server revenue doubled YoY to $16.4 billion; Dell lifted its FY2027 AI server revenue outlook to approximately $74 billion, up from an earlier $60 billion estimate.
- Full-year revenue guidance was raised to $192 billion (from $167 billion) and adjusted EPS guidance to $25.50 (from $17.90).
- Traditional servers and networking revenue jumped 122% to $10.5 billion, while storage revenue rose 26% to roughly $4.9 billion.
- Dell shares closed up 15.76% the day after results on 353% above-average trading volume, reversing a 6.8% pre-earnings decline.
- Nvidia is reportedly raising AI server prices by more than 15% on memory cost pressure, a supply-chain dynamic Dell itself flagged as a headwind to watch.
AI Server Backlog Rockets to a Record $95 Billion
Dell exited its fiscal second quarter with an AI-optimised server backlog of $95 billion, spread across more than 6,500 customers, nearly double the $51.3 billion backlog it carried just one quarter earlier. The jump came after the company booked $60.9 billion in AI server orders during Q2 alone, a quarterly record that pushed Dell’s trailing-twelve-month AI order total to $131.7 billion. Management said the pipeline of opportunities ahead is now “multiples of backlog,” pointing to sustained order momentum even as the company works through existing commitments.
Quarterly Numbers Beat Wall Street by a Wide Margin
Dell reported revenue of $47.0 billion for the quarter ended July 31, 2026, up 58% year-on-year and roughly $2.1 billion ahead of analyst expectations. Adjusted diluted EPS came in at $7.04, up 203% from a year earlier and well above the roughly $4.87 consensus estimate. Gross margin dollars grew 78% to $9.9 billion, lifting the gross margin rate to 21.1%. The Infrastructure Solutions Group (ISG) generated $31.8 billion in revenue, up 89% YoY, with operating income of $4.8 billion, up 225%, taking segment operating margin to 15.0%. AI-optimised servers alone contributed $16.4 billion of revenue, exactly double the year-ago figure.
Dell Sharply Raises Full-Year Guidance
On the back of the backlog build-up, Dell raised its FY2027 revenue guidance to $192 billion at the midpoint, up from $167 billion previously, a $25 billion upward revision. Adjusted EPS guidance was lifted to $25.50 from $17.90, both now above the $172.67 billion revenue and $18.92 EPS analysts had penciled in for the full year, according to LSEG data. For the fiscal third quarter, Dell guided to roughly $49 billion in revenue and $6.50 in adjusted EPS, also ahead of Street estimates of $41.42 billion and $4.48. The company separately raised its FY2027 AI server revenue outlook to approximately $74 billion, up from an earlier $60 billion projection.
Traditional Hardware Segments Also Firing
Growth wasn’t confined to AI hardware. Revenue from traditional servers and networking climbed 122% to $10.5 billion, while storage revenue rose 26% to roughly $4.9 billion, Dell’s sixth straight quarter of storage growth outpacing the broader market. The Client Solutions Group, covering PCs and laptops, posted revenue growth of 20% YoY, its eighth consecutive quarter of growth. The breadth of growth across AI and non-AI lines suggests broader enterprise data-centre and device-refresh spending is accelerating alongside the AI buildout, not being cannibalised by it.
The Margin Wildcard: Rising Memory and Component Costs
Dell’s own earnings call flagged continued supply constraints in DRAM, NAND, CPUs, disk drives, and other AI-related components, with the company using configuration changes and demand shaping to maximise output. That backdrop matters more given a separate Bloomberg report that Nvidia has told server manufacturers to expect price increases of more than 15% on systems built around its Vera Rubin and Grace Blackwell platforms, effective on units shipping from early 2027, driven by soaring HBM and DRAM costs. Because much of Dell’s $95 billion backlog was priced before this repricing wave, backlog conversion into margin-accretive revenue, not just revenue itself, is likely to be the more closely watched metric in coming quarters.
Stock Reaction: Record Volume, Sharp Swings
Dell shares fell 6.8% on the day of the earnings release as investors turned cautious ahead of the print, closing at $425. Once results landed, the stock reversed sharply, closing up 15.76% the following session at $492.00 on trading volume of 35 million shares — about 353% above its three-month average. Sector peers moved too: HP closed up 2.16% at $32.00 and Hewlett Packard Enterprise gained 1.94% to $51.85, as investors read across Dell’s numbers to the broader hardware and data-centre trade. The move added to a run that has taken Dell shares up more than 230% year-to-date in 2026.
What Wall Street Is Watching Next
Several brokerages raised price targets in response: Citi and Bank of America both lifted theirs to $600, while targets from other firms ranged as high as $735 at Melius Research and $635 at JPMorgan. Not every signal was unreservedly bullish, Evercore ISI’s Amit Daryanani raised his target to $575 but simultaneously removed Dell from the firm’s “Tactical Outperform” list following the results. Longer term, Susquehanna’s Mehdi Hosseini said Dell is tracking toward roughly $40 in EPS within 12–18 months, underscoring how much further Wall Street believes the AI server cycle has to run, provided component costs don’t erode the backlog’s economics first.
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Why It Matters for Indian Markets
Dell’s results land as fresh evidence that global AI infrastructure capex is still accelerating rather than plateauing, a theme Indian markets have been tracking closely through IT services majors with US enterprise exposure, hardware and EMS players tied into global server supply chains, and data-centre-linked power and cooling stocks. The Nvidia pricing dynamic adds a second layer: rising memory costs are a global phenomenon that could also feed into component costs for Indian electronics manufacturers and data-centre builders. Strong US tech capex prints have historically supported risk sentiment during periods of FPI inflows into Indian equities, making numbers like these a relevant global cue even though Dell itself trades only on the NYSE.
Bottom Line
Dell’s record $95 billion AI backlog effectively pre-funds several future quarters of revenue, but converting that backlog into shipped, billable infrastructure, amid DRAM, NAND and component supply constraints, and a fresh round of Nvidia-driven cost inflation, is now the key execution test. With guidance raised sharply across revenue, EPS, and AI server revenue, and at least one major brokerage tempering its enthusiasm even as it raised its target price, investors will be watching backlog-to-revenue conversion, margin trends, and whether the current pace of AI orders can be sustained into the back half of fiscal 2027.
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This article is for informational and educational purposes only and does not constitute investment advice or a recommendation to buy, sell, or hold any security. Dell Technologies Inc. is listed on the NYSE and not on Indian stock exchanges. NiftyTrader is a SEBI-registered platform; readers should consult a SEBI-registered financial adviser before making investment decisions.
