Dell Technologies (DELL) Q2 FY2027 Earnings Call: Q&A Summary

Q: Amit Daryanani with Evercore asked about the drivers behind the 122% traditional server growth, whether it is driven by pricing and prebuys rather than real demand, and what workloads or use cases are involved.

A: Jeffrey Clarke responded that traditional server growth is driven by data center modernization, consolidation of an aged installed base, heightened security requirements, and emerging AI agentic workflows. David Kennedy added that second-half growth rates are projected to maintain first-half levels.

Q: Benjamin Reitzes with Melius Research asked whether Dell expects to grow in line with NVIDIA next year and for comments on long-term growth given surged backlogs and new CPU racks.

A: David Kennedy pointed to the second-half trajectory and demand durability. Jeffrey Clarke added that the five-quarter pipeline grew sequentially after booking $131.7 billion in orders over four quarters, citing long-term agentic demand projections reaching over $1 trillion.

Q: Mark Newman with Bernstein asked whether the traditional server category is still almost all enterprise, and requested details on the relative growth rates and customer mix for AI servers.

A: Jeffrey Clarke stated that traditional server growth is primarily from historical enterprise customers with demand outstripping supply. He noted that AI servers are beginning to show up among traditional customers, neoclouds, and high-frequency traders, while enterprise AI customers and repeat buyers have increased.

Q: An unidentified analyst asked about storage retention policies, KB Cash, and unstructured data growth drivers in AI workloads.

A: Jeffrey Clarke discussed compliance requirements for data retention, new paths for storage growth, and the expansion of multimodal unstructured data, expressing optimism about storage growth going forward.

Q: Asiya Merchant with Citi asked about current supply constraints, what has changed since last quarter, and how supply will meet demand durability into next year.

A: Jeffrey Clarke explained that supply constraints remain centered on DRAM and NAND, along with spotty CPU shortages, disk drives, MOSFETs, power ICs, microcontrollers, and drivers. He noted that Dell optimized bits and bites toward the infrastructure business to help raise guidance by $25 billion.

Q: Michael Spednoff with Wells Fargo asked how the Lightning parallel file system is contributing and what attach rates are being seen on cloud AI server deals.

A: Jeffrey Clarke responded that Lightning is a relatively new product designed for native AI use cases, currently in beta at several customers and in runoffs against competitors.

Q: Joseph Cardoso with JPMorgan asked to break down traditional server and storage growth between volume and pricing, and whether customers are pushing back on higher prices.

A: Jeffrey Clarke explained that traditional servers have higher core counts, DRAM, and storage, carrying higher costs due to inflation, but underlying demand remains significant. He noted that Dell IP storage is growing through higher units and software-defined products.

Q: David Vogt with UBS asked about long-term margin differentials as customers modernize to next-generation servers and how much ISG margin uplift comes from mix versus efficiency and scale.

A: David Kennedy stated that scale is the number one driver for ISG margins, worth over 400 basis points in the quarter and over 650 basis points for the full-year guide, supplemented by storage growth and product and geo mix.