DELL Q2 Earnings Beat Estimates, Revenues Up Y/Y, Shares Fall

Dell Technologies DELL reported non-GAAP earnings of $2.32 per share in the second quarter of fiscal 2026, beating the Zacks Consensus Estimate by 0.43%. The bottom line increased 19% year over year.Revenues increased 19% year over year to $29.78 billion and surpassed the consensus mark by 1.56%. The rise was primarily driven by record AI server shipments.After the results were announced, shares of DELL lost 6.17% in pre-market trading.DELL’s Q2 Top-Line DetailsProduct revenues rose 26% year over year to $23.9 billion, beating the Zacks Consensus Estimate by 11.35%. Dell Technologies Inc. Price, Consensus and EPS Surprise Dell Technologies Inc. price-consensus-eps-surprise-chart | Dell Technologies Inc. QuoteServices revenues declined 4% year over year to $5.84 billion, missing the Zacks Consensus Estimate by 22.66%.Infrastructure Solutions Group (ISG) revenues increased 44% year over year to $16.80 billion.The upside can be attributed to servers and networking revenues of 12.94 billion, which grew 69% year over year, with demand strength across AI and traditional servers. Storage revenues decreased 3% year over year to $3.85 billion.In the reported quarter, Dell Technologies’ AI-optimized server momentum saw an increase of $5.6 billion in orders. The flagship PowerEdge XE9680 experienced strong demand, contributing to the momentum in the AI space.Dell Technologies shipped $10 billion worth of AI servers in the fiscal second quarter, and the AI server backlog remained healthy at $11.7 billion.CSG revenues were $12.50 billion, up 1% year over year. Commercial Client revenues increased 2% year over year to $10.78 billion, while Consumer revenues fell 7% to $1.72 billion.DELL’s Operating DetailsThe company’s fiscal second-quarter non-GAAP gross profit increased 1% year over year to $5.57 billion. The gross margin contracted 330 basis points (bps) year over year to 18.7%.SG&A expenses fell 9% year over year to $2.88 billion. Research and development expenses increased 1% year over year to $785 million in the reported quarter.Non-GAAP operating expenses declined 4% year over year to $3.28 billion. Operating expenses, as a percentage of revenues, contracted 270 bps on a year-over-year basis to 11%.The non-GAAP operating income was $2.28 million, up 10% year over year. The operating margin contracted 60 bps year over year to 7.7%.The ISG segment’s operating income jumped 14% year over year to $1.47 billion. The CSG segment’s operating income was $803 million, down 2% year over year.DELL’s Balance Sheet & Cash Flow DetailsAs of Aug. 1, 2025, DELL had $8.14 billion in cash and cash equivalents compared with $7.70 billion as of May 2, 2025.Total debt was $28.68 billion as of Aug. 1, 2025, compared with $28.78 billion as of May 2, 2025.The company generated cash flow from operations of $2.5 billion. The adjusted free cash flow was $2.51 billion in the second quarter of fiscal 2026.In the second quarter of fiscal 2026, Dell Technologies returned $1.3 billion of capital to its shareholders.DELL’s Q3 & FY26 GuidanceFor the third quarter of fiscal 2026, revenues are expected to be between $26.5 billion and $27.5 billion, with the mid-point of $27 billion suggesting 11% year-over-year growth.For the fiscal third quarter, Dell Technologies anticipates 13% growth at the midpoint for the combined ISG and CSG, with ISG growing in the low-twenties and CSG growing in the mid-single digits.Non-GAAP earnings are expected to be $2.45 per share (+/- 10 cents), at the midpoint, indicating 11% growth year over year.For fiscal 2026, revenues are expected to be between $105 billion and $109 billion, with the mid-point of $107 billion indicating 12% year-over-year growth.For fiscal 2026, Dell Technologies anticipates 14% growth at the mid-point for ISG and CSG combined, with ISG expected to increase in the mid-to-high twenties, with storage flat and CSG likely to grow in the low to mid-single digits. Non-GAAP earnings are expected to be $9.55 per share (+/- 25 cents), at the midpoint, up 17% year over year.Zacks Rank & Stocks to ConsiderDell Technologies has a Zacks Rank #3 (Hold) at present.Alkami Technology ALKT, Arista Networks ANET, and Amphenol APH are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. While ANET and ALKT carry a Zacks Rank #2 (Buy), APH sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Alkami Technology shares have lost 29.9% year to date. The Zacks Consensus Estimate for Alkami Technology’s full-year 2025 earnings is pegged at 58 cents per share, up by 7.4% over the past 30 days, implying growth of 100% from the year-ago quarter’s reported figure.Arista Networks shares have gained 23.2% year to date. The Zacks Consensus Estimate for ANET’s full-year fiscal 2025 earnings is pegged at $2.81 per share, up by 9.7% in the past 30 days, indicating year-over-year growth of 23.79%.Amphenol shares have gained 61.2% year to date. The Zacks Consensus Estimate for Amphenol’s full-year 2025 earnings has increased 1.34% to $3.02 per share in the past 30 days, indicating year-over-year growth of 59.79%.Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Dell Technologies Inc. (DELL): Free Stock Analysis Report Amphenol Corporation (APH): Free Stock Analysis Report Arista Networks, Inc. (ANET): Free Stock Analysis Report Alkami Technology, Inc. (ALKT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks