Dell Technologies delivered a strong Q2 FY2026, underscoring the continued trajectory of AI infrastructure demand and a diversified, end-to-end product portfolio. Revenue of $29.8 billion rose 19% year over year, driven by record AI shipments and double-digit growth in ISG, with ISG up 44% and CSG up 1% in aggregate. The AI mix lifted near-term profitability pressures but also established a substantial backlog and a robust five-quarter pipeline that Dell expects to convert into incremental orders. Management signaled that AI-specific margin dynamics should improve in the back half as the mix normalizes toward higher-margin traditional servers and Dell IP storage, even as AI servers remain a meaningful revenue driver and an increasingly important attach point for networking and services.
Key financials show a resilient operating profile: gross profit of $5.447 billion on revenue of $29.776 billion yields a gross margin of 18.3%, while operating income reached $1.773 billion (operating margin 5.95%) and net income $1.164 billion (net margin 3.91%). Diluted EPS stood at $2.32 for Q2. Cash generation remained strong, with operating cash flow of $2.543 billion and free cash flow of $1.868 billion; cash and investments totaled $9.8 billion at quarter-end, and total debt stood at $28.689 billion (net debt $20.544 billion). Dell maintained capital return discipline, repurchasing 8 million shares at an average of $114 and paying a quarterly dividend of about $0.53 per share.
Management guided a higher AI-focused revenue trajectory for the full year, signaling confidence in the NVIDIA-powered AI platform (including GB200/GB300 variants) and a multi-year AI TAM expansion. The company projects FY26 revenue of $105–$109 billion and non-GAAP EPS of $9.55 +/- $0.25, with AI server shipments expected to reach roughly $20 billion for the year. Near-term execution remains a priority, with guidance for Q3 revenue of $26.5–$27.5 billion and OpEx down low single digits, supported by a plan for margin improvement across ISG and CSG as AI mix rebalances. Investors should monitor AI backlog conversion, enterprise AI momentum, PC refresh timing, and ongoing margin progression as key drivers of the stock’s longer-term valuation trajectory.