Dell Technologies reported second-quarter fiscal 2027 results on September 1 that obliterated Wall Street expectations on nearly every measure, with record revenue, record earnings, and a skyrocketing AI server backlog that now dwarfs the company's full-year AI revenue guide.
Revenue and Earnings Blow Past Consensus
Dell posted revenue of $47.0 billion for the quarter ended July 31, 2026, up 58 percent year-over-year from $29.77 billion a year earlier. The figure comfortably exceeded the Zacks consensus estimate of $45.34 billion. Non-GAAP diluted earnings per share came in at $7.04, up 203 percent from $2.32, and vastly above the Street consensus around $4.87. GAAP diluted EPS was $6.34, up 273 percent from $1.70.
The Infrastructure Solutions Group (ISG), Dell's data center hardware division, generated $31.8 billion in revenue, up 89 percent and accounting for 68 percent of total sales. Within ISG, AI-optimized server revenue reached $16.4 billion, doubling from $8.2 billion a year ago and topping the StreetAccount consensus of $16.07 billion. Traditional servers and networking contributed $10.5 billion, up 122 percent. Storage revenue was $4.9 billion, up 26 percent.
Client Solutions Group (CSG), Dell's PC business, delivered $15.0 billion, up 20 percent — its strongest quarterly performance in years, driven largely by commercial accounts.
AI Backlog Reshapes the Growth Narrative
The most striking number was the AI server backlog: $95 billion, up from $14.4 billion a year earlier. Dell booked $60.9 billion in AI server orders during the quarter — nearly four times the $16.4 billion in AI revenue actually recognized — signaling that demand far outstrips the company's production capacity.
Chief Operating Officer Jeff Clarke said on the earnings call: "Our AI server momentum continues to accelerate. We booked $60.9 billion in AI orders this quarter, the most in our history." He added that the sales pipeline "remained multiples" of the $95 billion backlog even after $131.7 billion in AI orders over the trailing twelve months.
The $95 billion backlog now stands at roughly 1.3 times Dell's updated full-year AI server revenue guide of $74 billion — reframing that target as a supply constraint rather than a demand ceiling.
Second Full-Year Raise and Q3 Outlook
Dell raised its fiscal 2027 revenue guidance for the second time, lifting it by $25 billion to $192 billion, up 69 percent year-over-year. The prior guide, issued in May, had called for $165 billion to $169 billion. AI-optimized server revenue for the full year is now projected at $74 billion, up 200 percent from $24.7 billion in fiscal 2026, versus the earlier target of $60 billion.
Non-GAAP EPS guidance was raised to $25.50 from $17.90, and GAAP EPS guidance to $24.37 from $17.31. For Q3 FY27, Dell guided to $49 billion in revenue (up 81 percent year-over-year) and non-GAAP EPS of $6.50, suggesting the AI ramp is accelerating rather than plateauing.
The first-half revenue of $87 billion implies the company needs more than $105 billion in second-half revenue to hit the $192 billion target — a meaningful step-up that hinges on continued AI order conversion.
Risks and Open Questions
Despite the blockbuster numbers, several concerns linger. AI server margins remain lower than Dell's legacy storage and traditional-server businesses, and gross-margin percentage compression as AI mix rises is flagged in Dell's own risk disclosures. Operating cash flow declined 13 percent in the quarter to $2.2 billion, weighed down by rising working-capital requirements including inventory and receivables, even as net income surged. The binding constraint on converting the backlog into recognized revenue is accelerator supply — GPUs and custom silicon — and any hyperscaler capital-expenditure pause would show up first in the orders line.
Shares closed the regular session at $425 and rose roughly 16 percent on September 2 following the results.
Sources
1. Dell Technologies Q2 FY27 Press Release, September 1, 2026 — via Business Wire ([primary source](https://finviz.com/news/387708/dell-technologies-delivers-second-quarter-fiscal-2027-financial-results)) 2. CRN, [Dell AI Server Momentum Accelerates With Record $60.9B In Q2 AI Orders; Backlog Hits $95B](https://www.crn.com/news/data-center/2026/dell-ai-server-momentum-accelerates-with-record-60-9b-in-q2-ai-orders-backlog-hits-95b) 3. CNBC, [Dell surges 9% after lifting fiscal 2027 forecast on AI server growth](https://www.cnbc.com/2026/09/01/dell-q2-earnings-report-2027.html) 4. TradingKey, [Dell Q2 FY2027 Earnings: Server Growth Expands Revenue and Margins](https://www.tradingkey.com/news/earnings/262144801-tradingkey)
