- Dell reported a solid Q2 FY2025, with total revenue of $25.0 billion, up 9% year over year, led by a robust AI server cycle and continued strength in traditional infrastructure. ISG revenue surged to a record $11.6 billion (+38% YoY), with server and networking revenue up 80% to $7.7 billion, underscoring the accelerated demand for AI-enabled infrastructure. AI server shipments reached $3.1 billion in the quarter, with AI server backlog of $3.8 billion; the five-quarter pipeline has grown to multiple times the backlog, signaling a durable demand runway for AI deployments across Tier-2 CSPs and enterprise customers.
- Dell guided FY25 revenue to $95.5–$98.5 billion (midpoint $97.0B), implying about 10% growth, with ISG ~30% growth and CSG flat to low single digits for the year. Management emphasized margin progression in the second half, noting a gross margin decline of ~180 basis points year over year due to higher AI server mix and pricing competition, but ISG operating margin was up to 11% (a 300 bp sequential gain) and expected to improve further toward the lower-to-mid-teens range in its long-term framework. The company also announced a $328 million workforce-reduction charge as part of ongoing efficiency initiatives tied to AI-driven process improvements.
- The AI opportunity remains a cornerstone of Dell’s strategy, with a total AI hardware and services TAM of $174 billion (up from $152B, 22% CAGR). Dell highlighted an expanding AI pipeline into enterprise and sovereign opportunities, ongoing AI-enabled storage improvements, and ecosystem partnerships (e.g., storage and hyperconverged offerings). While VMware’s resale exit weighed on gross margin and ongoing portfolio mix, Dell positioned itself to capitalize on AI-driven demand and the PC refresh cycle, anticipating margin expansion and free cash flow generation in the latter part of FY25 and beyond.