Dell Technologies Inc. Q2 FY2026 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Highlights

  • Record revenue of $29.8 billion, up 19% year-over-year (vs. Q2 FY2025).
  • ISG (Infrastructure Solutions Group) and CSG (Client Solutions Group) combined revenue rose 22% year-over-year.
  • Record Q2 EPS of $2.32, up 19% year-over-year.
  • Operating expenses declined 4% year-over-year despite increased R&D investment.
  • Strong cash flow of $2.5 billion; $1.3 billion returned to shareholders.

AI Business Performance

  • Record AI server shipments: $8.2 billion shipped in Q2, $10 billion shipped in the first half (exceeds all FY2025 shipments).
  • AI orders reached $5.6 billion, backlog ended at $11.7 billion.
  • Five-quarter AI pipeline grew double digits, with strong enterprise and sovereign demand.
  • Dell updated full‑year AI server shipment outlook from $15 billion to $20 billion (+33% above prior guide).
  • AI revenue mix was nearly half of ISG revenue in Q2, creating rate pressure but strong gross dollar contribution.

ISG (Servers and Storage)

  • ISG revenue: $16.8 billion, up 44% year-over-year.
  • Servers and networking revenue: $12.9 billion, up 69% year-over-year, driven by AI servers and more richly configured traditional servers.
  • Traditional server demand strong outside North America, but NA weakness persisted from April.

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Operator: Good afternoon, and welcome to the fiscal year 2026 second quarter financial results conference call for Dell Technologies Inc. I'd like to inform all participants, this call is being recorded at the request of Dell Technologies. This broadcast is a copyright property of Dell Technologies Inc. Any rebroadcast of this information in whole or part without the prior written permission of Dell Technologies is prohibited. [Operator Instructions] I'd like to turn the call over to Paul Frantz, Head of Investor Relations. Mr. Frantz, you may begin. Paul Frantz: Thanks, everyone, for joining us. With me today are Jeff Clarke, Yvonne McGill and Tyler Johnson. Our earnings materials are available on our IR website, and I encourage you to review these materials. Also, please take time to review the presentation, which includes additional content to complement our discussion this afternoon. Guidance will be covered on today's call. During this call, unless otherwise indicated, all references to financial measures refer to non-GAAP financial measures, including non- GAAP gross margin, operating expenses, operating income, net income, diluted earnings per share, free cash flow and adjusted free cash flow. A reconciliation of these measures to their most directly comparable GAAP measures can be found in our web deck and our press release. Growth percentages refer to year-over-year change unless otherwise specified. Statements made during this call that relate to future results and

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