Q2 FY2027 results
| Metric | Result | Change |
|---|---|---|
| Revenue | $47 billion | Up 58% |
| Diluted EPS | $7.04 | Up 203% |
| ISG Revenue | $31.8 billion | Up 89% |
| AI Server Revenue | $16.4 billion | Not stated |
| CSG Revenue | $15 billion | Up 20% |
| Operating Income | $5.9 billion | Up 160% |
Guidance and outlook
- For Q3, we expect revenue to be $49 billion at the midpoint, up roughly 80% year-on-year.
- We expect ISG to grow roughly 145%, supported by $19 billion in AI server revenue.
- CSG revenue is expected to be up roughly 15%.
- For the full year, we are raising our revenue guide by $25 billion to $192 billion at the midpoint, up roughly 70%, with diluted non-GAAP EPS of $25.50 up approximately 150%.
How management sounded
Confident (+8 on our -10 to +10 scale). Management raised full-year revenue guidance by $25 billion and highlighted record-breaking AI orders and backlog alongside strong traditional server performance. Management sounded more upbeat than on 92% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Traditional Server Demand
Asked: Amit Daryanani from Evercore asked if the 122% growth in traditional servers is driven by pricing and prebuys rather than real demand.
Answer: Jeff Clarke stated growth is driven by data center modernization, consolidation of aged infrastructure, and new agentic AI workloads, noting that demand continues to outstrip supply.
Long-term AI Growth
Asked: Ben Reitzes from Melius Research asked if Dell's long-term growth will align with NVIDIA's growth projections.
Answer: Management emphasized the durability of demand across the portfolio and the shift of data centers from cost centers to value creators, noting a $1 trillion opportunity in AI infrastructure by 2030.
Customer Mix
Asked: Mark Newman from Bernstein asked about the mix of enterprise versus neocloud customers in server growth.
Answer: Jeff Clarke noted that traditional server growth is primarily enterprise-driven, while AI server demand is broadening across neoclouds, HFT customers, and enterprises, with over 6,500 customers now buying Dell AI factory solutions.
Supply Constraints
Asked: Asiya Merchant from Citi asked about the status of supply constraints.
Answer: Jeff Clarke explained that constraints persist in DRAM, NAND, CPUs, and various components, but the company is optimizing configurations and supply chain output to meet demand.
What to watch before the next call
- The ability to secure sufficient supply of critical components like DRAM, NAND, and CPUs to meet the record backlog.
- The execution of the 18G server launch and its impact on consolidation rates.
- The sustainability of the current operating expense rate of 8% of revenue as the company scales.
