- Dell CFO David Kennedy said AI-focused server demand is outpacing the company's reporting cycle, with $6.1B of Q2 AI server orders matching the prior three quarters combined and $13.2B of AI bookings over the trailing 12 months.
- Dell raised FY27 guidance by 70% relative to earlier analyst expectations, lifting the revenue guide to a $192B midpoint from $167B.
- The AI backlog stands at roughly $95B, while traditional server revenue grew 122% year-over-year and storage revenue rose 26%, with ISG posting a record 15% margin.
- Dell's 9.6% operating margin lags Cisco's 23.7%; management targets opex at about 8% of revenue for FY27 and a shift to higher-margin Dell IP storage to widen margins.
- Supply constraints in DRAM, NAND, CPUs, and AI-specific components are tightening; Dell shifted wafer supply from consumer PCs to infrastructure for H2, and management expects conditions to worsen in 2026 versus 2025.
- Dell increased share repurchases from $1.6B in Q1 to $3.9B in Q2, and the stock has returned 329% year-to-date with analyst price targets of $465-$735.
Quotes
“The firm booked $6.1 bn of AI server orders in the second quarter alone, matching the total booked in the prior three quarters”
“Management raised its fiscal 2027 revenue guide to $192 billion, signaling confidence that the backlog will convert to sales”
“The market is paying for growth instead.”