Dell Technologies (NYSE:DELL) saw its shares drop in premarket trading Friday after issuing cautious guidance for the current quarter, despite second-quarter results and a full-year outlook that exceeded analyst expectations, driven by rising enterprise investment in AI servers.
As of 04:33 ET, Dell was down roughly 6% in premarket action.
The company posted adjusted EPS of $2.32 for Q2 on revenue of $29.78 billion, slightly above estimates of $2.31 per share on $29.02 billion in sales. Its client solutions group grew 1% year-on-year to $12.5 billion. Operating margin reached 7.7%, aided by a 120-basis-point sequential gain in CSG margins to 6.4%, while ISG margins declined 90 basis points to 8.8%.
For the current quarter, Dell guided adjusted EPS of $2.45, below analyst expectations of $2.55, though revenue guidance of $26.5 billion to $27.5 billion topped the $26.31 billion consensus.
Looking further ahead, Dell now anticipates adjusted EPS of $9.55 for fiscal 2026 on revenue of $105 billion to $109 billion, or $107 billion at the midpoint—up from its prior EPS forecast of $9.40 on $103 billion revenue at the midpoint. This exceeds consensus estimates of $9.38 per share on $104.84 billion. The company also raised its full-year AI server sales forecast to $20 billion, from a previous $15 billion.
Evercore analysts cited multiple factors behind expected H2 revenue and margin growth, including “expansion of AI compute margins, ISG uptick from storage seasonality and improvement in Americas (x86 servers), and share gains on CSG.” They added that investors will likely scrutinize Dell’s plan to increase margins by about 250 basis points in H2 versus H1, though this is “more driven by seasonal assumptions + lack of 1x ramp-up costs in H2.”
Mizuho Securities analysts also highlighted the quarter’s “AI server strength,” noting they “continue to see secular growth in AI server shipments as LLM efficiency improves.”
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