Dell Smashes Q2 Estimates and Raises Full-Year Revenue Outlook by $25 Billion on AI Server Surge

Dell Technologies posted fiscal second-quarter revenue of $46.97 billion on Tuesday, beating the analyst consensus of $44.92 billion by roughly $2 billion and surging 58% from a year earlier. Adjusted earnings per share of $7.04 crushed the $4.91 estimate by $2.13, a gain of more than 200% year over year, while net income rose 255% to $4.1 billion and adjusted free cash flow jumped 224% to $8.1 billion.

The AI server business drove the blowout. Dell's AI-optimized server unit generated $16.4 billion in revenue for the quarter, double the year-ago figure and slightly ahead of the $16 billion Wall Street had penciled in. The broader Infrastructure Solutions Group brought in $31.78 billion, up 89% and well above the $29.8 billion estimate. Orders for AI servers hit a record $60.9 billion in the quarter, and the backlog closed at a record $95 billion, providing visibility well into next year.

Dell raised its full fiscal year 2027 guidance sharply across every metric. The company now targets $192 billion in annual revenue, up from its prior range of $165 billion to $169 billion and far above the $172.67 billion consensus. Its AI server revenue forecast jumped to $74 billion from roughly $60 billion, a figure representing a tripling of the business compared with fiscal 2026; just six months ago management had projected only a doubling. Adjusted EPS guidance rose to $25.50 from $17.90. For the third quarter, Dell guided to $49 billion in revenue and $6.50 in adjusted EPS, against consensus expectations of $41.42 billion and $4.48 respectively.

On the earnings call, Dell's COO noted that demand is broadening beyond neocloud providers to sovereign and enterprise customers, with the AI server customer count surpassing 6,500. Management said the majority of the installed base remains on 14th-generation or older servers, signaling a durable refresh cycle ahead, and projected that AI will account for 75% of all data center demand by 2030. The company's full-year operating expense rate of approximately 8% of revenue is the lowest in its 42-year history.

Dell shares fell about 4% during Tuesday's regular session, weighed down by rising bond yields and broader market weakness following U.S.-Iran tensions, against the backdrop of a roughly 266% rally over the prior period. After the results hit, the stock surged as much as 10% in after-hours trading. Evercore analyst Amit Daryanani described the quarter as printing "shock and awe" numbers. Deutsche Bank had initiated coverage earlier in the day with a Hold rating and a $480 price target.