Revenue: Record revenue of $47 billion, up 58% year-over-year.
Earnings Per Share (EPS): Record diluted non-GAAP EPS of $7.04, up 203%.
Gross Margin: Gross margin dollars grew 78% to $9.9 billion; gross margin rate was 21.1%.
Operating Expenses: Up 22% to $4 billion, down 250 basis points to 8.5% of revenue.
Operating Income: Grew 160% to $5.9 billion, or 12.6% of revenue.
Net Income: Up 189% to $4.6 billion.
ISG Revenue: Record revenue of $31.8 billion, up 89%.
AI Server Revenue: Recognized $16.4 billion in revenue; booked record $60.9 billion in AI orders; ended quarter with record $95 billion AI backlog.
Traditional Server and Networking Revenue: $10.5 billion, up 122%.
Storage Revenue: $4.9 billion, up 26%.
ISG Operating Income: Record $4.8 billion, up 225%; operating margin was 15%, up 620 basis points.
CSG Revenue: Up 20% to $15 billion; commercial revenue up 22% to $13.2 billion; consumer revenue up 7% to $1.8 billion.
CSG Operating Income: $1.1 billion, or 7.6% of revenue.
Cash Flow: Cash flow from operations of $2.2 billion; adjusted free cash flow of $8.1 billion.
Capital Returned to Shareholders: Record $4.3 billion, including repurchasing 9.5 million shares at an average price of $401 per share and paying a dividend of approximately $0.63 per share.
Cash and Investments: Ended quarter with $14.2 billion; core leverage ratio at 0.8 times.
Q3 Guidance: Revenue expected to be $49 billion at midpoint, up roughly 80% year-on-year; diluted non-GAAP EPS expected to be $6.50, up over 150%.
Full Year Guidance: Revenue raised by $25 billion to $192 billion at midpoint, up roughly 70%; diluted non-GAAP EPS of $25.50, up approximately 150%.
Release Date: September 01, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
Record revenue of $47 billion, up 58% year-over-year, and record EPS of $7.04, up 203%.
AI server momentum accelerated with record $60.9 billion in orders, $16.4 billion in revenue, and a record $95 billion backlog.
Traditional server revenue grew 122%, driven by data center modernization and agentic AI workloads, with significant share gains.
Storage revenue grew 26%, with Dell IP portfolio demand growing above market for six consecutive quarters.
Raised full-year revenue guidance by $25 billion to $192 billion and EPS to $25.50, reflecting strong second-half expectations.
Negative Points
Supply constraints persist, particularly for DRAM, NAND, and other components, limiting ability to meet full demand.
AI server revenue growth may pressure gross margins due to mix, though overall margins improved this quarter.
CSG operating income rate is expected to moderate to roughly 6% in Q3 as the company balances demand and profitability.
Customer cost sensitivity is leading to extended PC upgrade cycles, potentially delaying refresh opportunities.
The company faces execution risks in managing a dynamic supply environment and scaling operations to meet unprecedented demand.
Q & A Highlights
Q : Can you discuss the durability of the strong demand seen in traditional servers (up 122%) and storage (up 26%), and whether this is driven by real demand versus pricing or pre-buys? A : Jeff Clarke (COO) stated that the growth is driven by durable, real demand, not just pricing. Key drivers include data center modernization and consolidation of an aged install base (1.2 million assets are still 14G or older), which requires new servers with more cores, DRAM, and storage. He also cited heightened security and resiliency requirements as a forcing function for upgrades. David Kennedy (CFO) added that the durability is reflected in their guidance, which maintains strong second-half growth rates for both traditional servers (triple digits) and storage (mid-teens).
Q : Given the massive backlog and NVIDIA's growth projections, should Dell expect to grow in line with NVIDIA next year? What is your long-term growth outlook? A : David Kennedy (CFO) anchored on the company's second-half trajectory, which mirrors the first half's 71% growth, and expressed confidence in the durability of demand. Jeff Clarke (COO) provided a long-term view, stating that the pipeline grew sequentially even after booking $131.7 billion in orders over the past four quarters. He highlighted that agentic AI is reshaping data centers and that Dell sees a more than $1 trillion addressable opportunity through 2030, driven by inference demand, enterprise agentic workloads, and the need for 200 gigawatts of additional power.
Q : Can you provide more detail on the customer mix for traditional servers and AI servers? Is the traditional server growth still from enterprise, and is the AI mix shifting? A : Jeff Clarke (COO) confirmed that the 122% growth in traditional servers is primarily from historical enterprise customers, with demand outstripping supply. He noted that neo-clouds and high-frequency traders are also beginning to buy CPU-based AI servers. For AI servers, the customer count has surpassed 6,500, with 3,300 new customers added in the last three quarters, indicating an acceleration in enterprise adoption. Enterprise revenue, repeat buyers, and the enterprise pipeline all grew sequentially and year-over-year, although the overall mix didn't change dramatically due to continued strength in sovereign and neo-cloud deals.
Q : Where are the current supply constraints, and how are you managing them to meet the demand durability you are seeing? A : Jeff Clarke (COO) stated that supply remains a challenge, with constraints on DRAM, NAND, and spotty CPU shortages. He detailed that they are optimizing the "bits and bytes" they receive by shaping demand and maximizing factory output. The decision to shift components from the PC business to infrastructure earlier in the year is now yielding results, contributing to the improved second-half guidance. He also noted constraints further down the supply chain, including power ICs, MOSFETs, and optical components, but expressed confidence in their ability to optimize output.
Q : How is the new 'Lightning' parallel file system product contributing, and what is the attach rate to AI server deals? A : Jeff Clarke (COO) said that Lightning, their parallel file system designed for native AI use cases, is still a relatively new product. It is currently in beta at several customers and is being evaluated in competitive runoffs. He indicated that while interest is strong, it is still early, and they will provide updates as it builds momentum.
Q : Can you break down the growth in traditional servers and storage between volume and pricing, and are you seeing any customer pushback on higher prices? A : Jeff Clarke (COO) explained that while there is an inflationary component to the growth due to higher input costs, the underlying demand is significant. For servers, the growth is driven by modernization (higher core counts, more DRAM) and new use cases from agentic AI. Demand continues to outpace supply. For storage, the growth is driven by a mix shift towards their higher-value Dell IP portfolio and increased use in AI applications. He did not indicate any significant customer pushback, noting that demand continues to outstrip supply.
Q : Can you help us understand the long-term margin differentials as customers modernize to next-gen servers, and how much of the ISG margin uplift is from like-for-like margin lift versus efficiency and scale? A : David Kennedy (CFO) attributed the strong ISG operating margin of 15% primarily to scale, which drove over 400 basis points of improvement in the quarter and is expected to drive over 650 basis points for the full year. He also highlighted the significant contribution from storage growth, which adds high-margin revenue dollars. The remainder of the improvement comes from product mix, geographic mix, and disciplined execution across pricing and operations.
Q : What is driving the strong growth in the storage business, and how are AI workloads contributing to this demand? A : Jeff Clarke (COO) stated that storage growth is driven by a combination of factors: the inherent growth of data, the competitiveness of their Dell IP portfolio (which has grown above market for six consecutive quarters), and new demand from AI workloads. He noted that AI workloads require customers to prepare, manage, and move increasingly large volumes of data, creating incremental demand for storage solutions like PowerScale and ObjectScale. He also mentioned that new AI techniques, such as KV Cache, are creating new storage requirements.
Q : What is the company's outlook for the second half of the fiscal year, and what are the key drivers of the raised guidance? A : David Kennedy (CFO) provided a strong outlook, raising the full-year revenue guidance by $25 billion to $192 billion and EPS to $25.50. For Q3, they expect revenue of $49 billion, with ISG growing roughly 145% and AI server revenue of $19 billion. The raised guidance is driven by continued strong demand across all lines of business, improved gross margin rates, and significant operating leverage, with operating expenses expected to be approximately 8% of revenue, the lowest in the company's history.