Executive Summary
Dell Technologies delivered a solid Q4 2025 performance with revenue of $23.9 billion, up 7% year over year, driven by strength in Infrastructure Solutions Group (ISG) and continued demand for AI-oriented architectures. The company highlighted a robust AI opportunity pipeline, with AI orders of $1.7 billion and AI-only backlog approaching $9 billion, underscoring a multi-year growth trajectory in AI-enabled servers, disaggregated storage, and related services. Management emphasized ongoing efficiency measures that expanded operating margins within ISG (record ISG operating income of $2.1 billion, 18.1% ISG margin) while signaling a strategic pivot to higher-margin Dell IP storage (PowerStore Prime and PowerScale) to sustain overall gross margins amid a competitive pricing environment.
For FY26, Dell guided to revenue of $101–$105 billion (midpoint $103 billion, +8% YoY) with ISG growing in the high-teens and CSG in the low-to-mid single digits. The company expects gross margin to decline roughly 100 basis points due to a higher mix of AI-optimized servers, while OpEx is expected to decline in the low single digits. Diluted non-GAAP EPS guidance is $9.30 ± $0.25. Dell reinforced a constructive capital allocation stance (increased dividend by 18% to $2.10 per share and an additional $10 billion in buyback authorization) and highlighted a durable operating model built on simplification, standardization, and automation.
Investors should weigh the growth optionality from AI-driven server deployments and Dell IP storage against margin pressure from AI mix and competitive dynamics, while monitoring the pace of PC refresh cycles, tariff/rerouting risks, and the evolution of DFS assets under management. The forward outlook appears tethered to execution on AI backlog monetization, continued storage profitability, and disciplined cost management.
Key Performance Indicators
QoQ: 38.31% | YoY:150.76%
Key Insights
Revenue: $23.931B in Q4 2025, up 7.58% YoY and -1.79% QoQ; Gross Profit: $5.826B (gross margin 24.34%); Operating Income: $2.307B (operating margin 11.22%); Net Income: $1.654B (net margin 6.91%); EPS (diluted): $2.15–$2.20; ISG Revenue: $11.4B (up 22% YoY); ISG Operating Income: $2.1B (ISG margin 18.1%); AI backlog: ~ $9B; AI orders: $1.7B; AI shipments: $2.1B; Backlog guidance for AI: $9B as of today; FY26 guidance: Revenue $101–$105B, EPS $9.30 ± $0.25; Q1 FY26 Revenue guide: $22.5–$23...
Financial Highlights
Revenue: $23.931B in Q4 2025, up 7.58% YoY and -1.79% QoQ; Gross Profit: $5.826B (gross margin 24.34%); Operating Income: $2.307B (operating margin 11.22%); Net Income: $1.654B (net margin 6.91%); EPS (diluted): $2.15–$2.20; ISG Revenue: $11.4B (up 22% YoY); ISG Operating Income: $2.1B (ISG margin 18.1%); AI backlog: ~ $9B; AI orders: $1.7B; AI shipments: $2.1B; Backlog guidance for AI: $9B as of today; FY26 guidance: Revenue $101–$105B, EPS $9.30 ± $0.25; Q1 FY26 Revenue guide: $22.5–$23.5B; Gross Margin ~24–24.5%; OpEx down low single digits; ISG margin expected to be roughly flat YoY; DFS AUM: $15B; Operating cash flow (Q4): $0.6B; Net cash from operations (FY25): $? (noted as positive in call); Cash at end of period: $5.2B; Total debt: $24.6B; Leverage: 1.2x; Free cash flow (Q4): -$0.15B; Shares outstanding (diluted): ~696–713M range depending on period; Dividend: $0.45 per share in Q4, raised to $2.10 annualized; Buybacks: $10B authorization increase)
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
23.93B |
7.58% |
-1.79% |
| Gross Profit |
5.83B |
17.13% |
9.78% |
| Operating Income |
2.31B |
150.76% |
38.31% |
| Net Income |
1.65B |
72.29% |
46.11% |
| EPS |
2.20 |
62.96% |
36.65% |
Key Financial Ratios
operatingProfitMargin
9.64%
operatingCashFlowPerShare
$0.84
freeCashFlowPerShare
$-0.22
dividendPayoutRatio
18.8%
Management Commentary
- Strategy and AI: Dell emphasizes AI as a growth engine across ISG, CSG, and VMware, with a focus on Dell IP storage and AI-optimized servers. Management cited a multi-year AI opportunity with a backlog of ~ $9B and a forthcoming cadence of AI server shipments (targeting at least $15B in AI server revenue). Jeff Clarke highlighted Dell’s end-to-end value proposition (design, services, and financing) as a differentiator in large-scale AI deployments.
- Operational efficiency: Yvonne McGill and Jeff Clarke outlined ongoing cost reductions and a modernization program (simplify, standardize, automate) that support higher investment in strategic areas while delivering margin improvements in ISG (record 18.1% ISG margin in Q4) amid a competitive pricing environment.
- PC refresh and CSG redemption: Dell expects a broader PC refresh cycle to drive CSG growth in 2H of FY26; SMB strength observed, while consumer demand remains soft. The Windows 10 end-of-life transition and AI-PC introductions are expected to catalyze PC upgrades.
- Financial discipline: Dell maintained a strong capital-return cadence, with a dividend increase and a large buyback authorization, while signaling a balanced approach to maintain financial flexibility in a volatile macro and supply chain environment.
- Risks and dynamics: Management acknowledged tariff volatility and potential price adjustments to offset input costs, the ODM/OEM competition in AI servers, and ongoing supply-chain and pricing pressure in a dynamic AI hardware market.
"We are extremely well positioned to capture growth across every segment of our business and extend AI from the largest at-scale CSPs to enterprise workloads and out to the edge with the PC. These tailwinds and our unique operating model that leverages our leading product positions, our go-to-market engine, services and supply chain, underpin our confidence that our opportunity continues to grow as we look ahead to FY '26."
— Jeff Clarke
"The AI backlog is roughly $9 billion as of today."
— Jeff Clarke
Forward Guidance
- Revenue trajectory: FY26 revenue guidance of $101–$105B (+8% midpoint) driven by ISG high-teens growth (including about $15B of AI server shipments) and mid-to-low single-digit growth in CSG. The combined ISG+CSG growth guidance at the midpoint is 10%.
- Margins and profitability: Gross margin is guided to decline ~100 bps due to higher AI server mix, with OpEx down low single digits, implying operating margin stabilization/slight compression offset by higher AI/server volumes and storage profitability from IP storage assets.
- EPS and liquidity: Non-GAAP diluted EPS guidance of $9.30 ± $0.25, up ~14% at the midpoint, supported by operating leverage and capital returns. The company plans to sustain a robust cash-flow generation cadence, maintained dividend growth, and additional buyback capacity as part of its capital-allocation framework.
- Key risks to monitor: AI server supply-demand balance (though management indicated visibility into a growing AI pipeline), tariff-related input costs and potential price adjustments, PC refresh timing and Windows-end-of-life dynamics, and ongoing competitive pressures in storage and traditional servers.
- Investor takeaway: A constructive, AI-led growth story with a cost-optimization program that should drive durable margins and earnings growth, complemented by aggressive capital returns. Key monitors include AI backlog monetization progress, gross margin mix dynamics (Dell IP storage vs. partner IP), and the pace of PC refresh in both SMB and enterprise segments.