Dell Technologies’ stock rose about 9% in after-hours trading following the company’s fiscal second-quarter results for the period ended July 31, when it reported record revenue and hiked its annual outlook for the second time this year.
Quarterly results — key figures
- Revenue for the quarter rose 58% year-over-year to a record $47.0 billion, above the $44.9 billion analysts had expected.
- Adjusted earnings per share were $7.04, compared with the $4.92 consensus; one year earlier adjusted EPS was $2.32.
Data-center business drives growth
The primary growth engine was the Dell Infrastructure Solutions Group (data-center business), whose revenue increased 89% to a record $31.8 billion, topping the $29.6 billion analyst forecast. Revenue from AI-optimized servers totaled $16.4 billion during the quarter.
Dell said it received $60.9 billion of new orders in the quarter for these systems, and its backlog of unfilled orders rose to $95 billion. Over the past twelve months the company recorded $131.7 billion of orders related to AI servers.
Management stated the pipeline of potential deals is several times larger than the current backlog, suggesting near-term demand is not easing. Dell has sold this infrastructure to more than 6,500 customers, including cloud providers, large enterprises and government organizations.
Updated guidance and expectations
- Dell now expects $74 billion of revenue from AI-optimized servers in fiscal 2027, which would represent a 200% year-over-year increase (threefold). Six months earlier the company had forecast 103% growth, and at the prior reporting it had raised the annual AI-server revenue outlook to $60 billion.
- The company raised its full-year revenue guidance by $25 billion, from $167 billion to $192 billion. Full-year adjusted EPS guidance was increased from $17.90 to $25.50.
- By contrast, analyst consensus had been $172.67 billion of revenue and $18.92 adjusted EPS.
For the current (third) quarter, Dell guided to $49 billion of revenue — an implied 81% year-over-year increase — versus analysts’ $41.4 billion estimate. Third-quarter adjusted EPS was guided to $6.50, above the $4.49 consensus.
Supply constraints
Management cautioned that demand in several areas exceeds available supply and that delivery pace is partly constrained by availability of Nvidia accelerators, memory chips and other key components. Dell’s systems are equipped in many cases with Nvidia accelerators and are used by customers to build high-performance compute clusters.
Significance
The combination of record revenue, large new orders and a sizable backlog underscores strong demand for AI infrastructure, materially improving Dell’s revenue and profit outlook. The revised guidance — and the size of the order pipeline — indicate an acceleration in AI-related spending, while component availability remains a potential short-term limiter.
This article does not constitute investment advice or a recommendation.
