Key Highlights

● Second-quarter revenue was $47.0bn, up 58% year on year.

● Dell booked a record $60.9bn of AI server orders in the quarter.

● Backlog at quarter end was a record $95bn.

● Fiscal 2027 revenue guidance was raised from $167.0bn to $192.0bn.

Dell Technologies Inc. (NYSE:DELL) reported second-quarter fiscal 2027 results on 1 September 2026, for the quarter ended 31 July. Revenue was $47.0bn, up 58% year on year. GAAP operating income was $5.4bn and non-GAAP operating income $5.9bn. GAAP diluted earnings per share were $6.34 and non-GAAP $7.04, on 652 million diluted weighted-average shares. The Infrastructure Solutions Group generated $31.8bn of revenue, up 89%, with an operating margin of 15.0% against 8.8% a year earlier. The Client Solutions Group generated $15.0bn, up 20%, with a 7.6% operating margin. The figures are from the company's Form 8-K. GAAP net income was $4.1bn and non-GAAP net income $4.6bn. Within the Client Solutions Group, commercial revenue was $13.2bn and consumer revenue $1.8bn. For six months, the Infrastructure Solutions Group margin was 12.9%, against 9.1% a year earlier.

The AI server engine

AI-optimised servers were the standout. The company booked a record $60.9bn of AI server orders in the quarter and recognised a record $16.4bn of AI server revenue, up 100%. Backlog at quarter end was a record $95bn. Within Infrastructure Solutions, traditional servers and networking revenue was $10.5bn, up 122%, and storage was $4.9bn, up 26%. The release does not report shipment units. Backlog represents orders not yet recognised as revenue, so timing depends on supply, customer acceptance and delivery schedules. The release contains no commentary on tariffs or memory costs. AI server revenue was roughly a third of group revenue in the quarter, based on the reported figures.

Cash, debt and shareholder returns

Operating cash flow was $2.2bn in the quarter and $6.3bn for six months, while free cash flow was $1.0bn and adjusted free cash flow $8.1bn, a company-defined measure. Capital expenditure and capitalised software were $1.2bn. At 31 July, cash was $11.6bn and total debt $34.5bn, of which $8.5bn was short term. Dell returned a record $4.3bn to shareholders through buybacks and dividends in the quarter, and declared a quarterly dividend of $0.63 per share, payable on 30 October to holders of record on 20 October 2026.

Adjusted free cash flow is a company-defined measure. Deferred revenue at 31 July was $14.8bn short term and $15.0bn long term. The release does not report a cash conversion cycle. Sales outside the United States were about 45% of consolidated net revenue in fiscal 2026, according to the annual report, so currency exposure is relevant.

Raised guidance

Management raised its fiscal 2027 revenue guidance from $167.0bn to $192.0bn, up 69%, and AI server revenue guidance from $60.0bn to $74.0bn. It now expects GAAP diluted earnings per share of $24.37 and non-GAAP earnings per share of $25.50, up from $17.31 and $17.90. For the third quarter it guided to revenue of about $49.0bn, GAAP earnings per share of $6.10 and non-GAAP earnings per share of $6.50. Guidance excludes potential gains or losses on strategic investments and unestimated severance. These are forecasts and can change with demand and supply conditions. The third-quarter guide also implies revenue growth of 81% year on year, GAAP earnings per share growth of 168% and non-GAAP growth of 151%.

AI Server Margins, Working Capital and Supplier Concentration Are the Variables

The company's annual report says AI sales face intense competition and pricing pressure that can affect gross margins, and that large AI orders may require more working capital, carry higher credit exposure and risk excess inventory if orders are delayed or cancelled. It relies on a few contract manufacturers and on single-source or limited-source suppliers, and on access to debt markets. The margin on AI servers, not the order book alone, is the variable in focus.