Dell Technologies ($DELL) reported its fiscal second quarter of 2027, the three months to July 31, 2026, after the market close on Tuesday, September 1. Three record figures define the print: $60.9 billion of AI server orders booked, $16.4 billion of AI server revenue recognised, and a $95 billion AI backlog at quarter end. Revenue was $46.971 billion, up 58% year over year; non-GAAP diluted EPS was $7.04 and GAAP diluted EPS was $6.34. Dell raised its fiscal 2027 revenue outlook by $25 billion to $192.0 billion.
The figure that organises this analysis is not the beat but the shape. AI server orders rose from $24.4 billion in the first quarter to $60.9 billion in the second, a step of roughly 2.5x. AI server revenue moved from $16.1 billion to $16.4 billion, up 1.9%. Orders are what customers have committed to; revenue is what the factory could build and ship in the quarter. The distance between the two is the $95 billion backlog. It is also the third AI-infrastructure print in as many weeks in which management pointed at memory, after NVIDIA's Q2 FY2027 results, where memory and component cost inflation pushed the gross margin guide down.
This article lays out four things the reader can check independently: the beat against Dell's own May guidance, the arithmetic the second-half guide implies, the direction of the margin rate, and the cash-flow statement behind the headline 'adjusted' figure. It then covers the segments, the four trading sessions that have closed since the print, what analysts changed, and how the quarter connects to the May report.
Key Takeaways
- AI server orders were a record $60.9 billion, up from $24.4 billion in Q1; AI server revenue was $16.4 billion, up 1.9% sequentially; the quarter ended with a record $95 billion AI backlog.
- Revenue of $46.971 billion beat Dell's own May guidance midpoint of $44.5 billion by 5.6%; non-GAAP EPS of $7.04 beat the $4.80 midpoint by 46.7%; GAAP EPS of $6.34 beat the $4.48 midpoint by 41.5%.
- Non-GAAP gross margin rose to 21.1% from 18.7% a year earlier and 18.1% in Q1, the opposite direction from the NVIDIA and Broadcom margin guides; the levels are not comparable, only the direction.
- Operating cash flow fell 12.5% to $2,225 million while GAAP net income rose 255%; free cash flow was $986 million; Dell's 'adjusted free cash flow' of $8,149 million adds back $6,667 million of financing receivables under Dell's own definition.
- Dell's fiscal 2027 guidance is now $192.0 billion of revenue and $74 billion of AI server revenue, which by arithmetic requires second-half AI shipments about 28% above the first half.
- The stock closed at $533.88 on September 8, 25.62% above its report-day close of $425.00 and 324.1% above its December 31, 2025 close; seven firms raised price targets and all maintained their ratings.
The Print in One Table: Actual vs Dell's May Guide
The cleanest way to measure a beat is against what the company itself said it expected. On May 28, Dell guided the second quarter to $44.5 billion of revenue at the midpoint, $4.80 of non-GAAP diluted EPS and $4.48 of GAAP diluted EPS. Every line came in above that.
| Line | May 28 guidance midpoint | Q2 FY2027 actual | Difference |
|---|---|---|---|
| Revenue | $44.5B | $46.971B | +$2.47B (+5.6%) |
| Non-GAAP diluted EPS | $4.80 | $7.04 | +46.7% |
| GAAP diluted EPS | $4.48 | $6.34 | +41.5% |
The income statement behind those three lines: GAAP operating income was $5,385 million, up 204%; GAAP net income was $4,133 million, up 255%; the effective tax rate was 19.5%, with $998 million of tax on $5,131 million of pre-tax income. Diluted shares fell to 652 million from 686 million, a 5.0% reduction, which is why GAAP EPS grew 273% while GAAP net income grew 255%. Non-GAAP diluted EPS grew 203% on the same share count. The GAAP-to-non-GAAP bridge for EPS adds $0.15 of intangibles amortization, $0.28 of stock-based compensation and $0.39 of other corporate expenses, then subtracts $0.11 of fair-value adjustments on equity investments and $0.01 of tax, taking $6.34 to $7.04. The same bridge takes GAAP operating income of $5,385 million to a non-GAAP $5,929 million through $96 million of amortization, $184 million of stock-based compensation and $264 million of other corporate expenses.
Consensus differed by compiler
Consensus is a less stable anchor than guidance because it depends on who compiled it. Reuters cited an LSEG consensus of $44.92 billion of revenue and $4.91 of EPS, which the actuals beat by 4.6% and 43.4%. SiliconANGLE cited $4.92. The estimate captured in the EPS surprise table below was $5.01, beaten by 40.46%. For AI servers specifically, SiliconANGLE reported a StreetAccount consensus of $16.07 billion against the $16.40 billion actual, a 2.1% beat. The differences are small next to a 40%-plus surprise, but a reader comparing headlines across outlets will see three different beat percentages, and none of them is wrong. That is why the table above anchors on Dell's own numbers.
The Order Book Outran the Factory
AI orders $24.4B to $60.9B; AI revenue $16.1B to $16.4B
| AI server metric | Q1 FY2027 | Q2 FY2027 | Change |
|---|---|---|---|
| Orders booked | $24.4B | $60.9B | +149.6% (about 2.5x) |
| Revenue recognised | $16.1B | $16.4B | +1.9% |
| Backlog at quarter end | ~$50.5B (implied, not reported) | $95B (record) | — |
AI-optimized servers contributed $16,401 million of revenue, double the $8,208 million of a year earlier. That is 34.9% of total company revenue and 51.6% of the Infrastructure Solutions Group. The sequential picture is the one to hold in mind: orders more than doubled in a single quarter while shipments barely moved.
'DRAM, DRAM, DRAM': the constraint Clarke named
Why did revenue stay flat while orders rose 2.5x? Jeff Clarke, Dell's Vice Chairman and Chief Operating Officer, answered that question from Asiya Merchant of Citi on the September 1 earnings call in one sentence.
"The constraints remain the same. DRAM, DRAM, DRAM, followed by NAND, NAND, NAND. We have spotty CPU shortages. There are shortages with disk drives.
— Jeff Clarke, Vice Chairman and Chief Operating Officer, Dell Technologies (Q2 FY2027 earnings call, September 1, 2026)
In the same answer he described how Dell allocated the scarce parts: 'One of the things that we did earlier this year as we saw the PC market showing signs of softening in the second half, we optimized the bits and bytes we have towards the infrastructure business.' He also described customer behaviour under that scarcity: 'They are placing their orders further in advance to ensure they have access to supply.' Read together, the two statements describe both sides of the order-versus-revenue gap. Customers are ordering earlier because supply is tight, which lifts the order line; the factory can only ship what the memory supply allows, which caps the revenue line.
This is the same bottleneck the two chip-designer prints described, but it surfaces differently at an assembler. At NVIDIA, management attributed a lower gross margin guide to memory and component cost inflation. At Broadcom, management attributed the margin walk to XPU memory content in the mix. At Dell, by Clarke's account, memory shows up as a shipment ceiling rather than a margin give-up: revenue is what the factory can build, and the backlog is what customers have already ordered. Each company's explanation belongs to its own executive; in all three cases management pointed at memory, and that is the extent of the shared claim.
Two readings of a $95B backlog
A $95 billion backlog against $16.4 billion of quarterly recognition can be read two ways, and the print supports both.
The first reading is visibility. For a hardware assembler, an order book several times larger than a quarter's shipments is unusual, and it is already committed rather than forecast. Wamsi Mohan of Bank of America wrote that demand 'continues to outpace supply' and that demand outpaces supply by roughly 30% in fiscal 2027.
The second reading is that revenue Dell cannot yet build is revenue on which neither the margin nor the component cost is known yet. Clarke himself, speaking about traditional-server configurations rather than AI servers, said: 'They cost more than they did last quarter and the quarter before and the quarter before. So there's a notion of inflation inside our growth. But the underlying demand for the technology is significant.' Dell does not disclose how much of the 122% growth in traditional servers and networking is price and how much is units, so that split cannot be estimated from the release. What the backlog will earn when it ships is not in this quarter's numbers; what it will cost to build is not in them either. The next two prints will supply the evidence for whichever reading holds.
What the $192B and $74B Guide Requires in the Second Half
Dell raised every line of its fiscal 2027 outlook. The table pairs the May 28 guidance with the September 1 guidance.
| Fiscal 2027 guidance | May 28, 2026 | September 1, 2026 |
|---|---|---|
| Revenue | $167.0B | $192.0B (+69% YoY) |
| AI server revenue | approximately $60B | $74B (+200% YoY) |
| GAAP diluted EPS | $17.31 | $24.37 |
| Non-GAAP diluted EPS | $17.90 | $25.50 (+148% YoY) |
| Operating expenses | — | approximately 8% of revenue |
For the third quarter, Dell guided revenue to $49.0 billion at the midpoint, up 81% year over year, with GAAP diluted EPS of $6.10 and non-GAAP diluted EPS of $6.50. David Kennedy, Chief Financial Officer, added the segment detail on the call: 'For Q3, we expect revenue to be $49 billion at the midpoint, up roughly 80% year-on-year. We expect ISG to grow roughly 145%, supported by $19 billion in AI server revenue.' He also guided a diluted share count of approximately 651 million. Reuters reported that the $49.0 billion revenue guide sat 18.3% above the LSEG consensus of $41.42 billion and that the $6.50 EPS guide sat 45.1% above the LSEG consensus of $4.48.
Guidance, not fact
- The $192.0 billion, $74 billion, $49.0 billion, $19 billion, $25.50 and $6.50 figures are Dell's guidance or stated expectations, not results and not a forecast made here.
- Forward-looking statements depend on assumptions about supply, demand and component costs that may not hold, and actual results may differ materially from guidance.
The guide can be turned into arithmetic the reader can check without adding any assumption of their own.
Guide Arithmetic the Reader Can Check
| Step | AI server revenue | Total revenue |
|---|---|---|
| Full-year fiscal 2027 guide | $74.0B | $192.0B |
| First-half actual (Q1 + Q2) | $16.1B + $16.4B = $32.5B | $90.813B |
| Q3 guide or stated expectation | $19.0B | $49.0B |
| Implied Q4 (guide minus H1 minus Q3) | approximately $22.5B | approximately $52.2B |
| Implied second half | $41.5B | $101.2B |
| Implied H2 versus H1 | about 28% higher | — |
These are sums of Dell's own figures, not forecasts. The implied fourth-quarter figures are labelled 'implied' because Dell has not guided the fourth quarter separately.
The arithmetic says something specific about the constraint Clarke named. AI server shipments were $16.1 billion in Q1 and $16.4 billion in Q2. Reaching the $74 billion guide requires shipments of about $41.5 billion across Q3 and Q4, roughly 28% more than the first half delivered, while Clarke says DRAM, NAND, CPU and disk-drive constraints remain. The guide therefore embeds an expectation that the shipment ceiling rises in the second half. Whether it does is a question for the October-quarter print, not for this one.
The Margin Rate Went Up: The Opposite Direction From NVIDIA and Broadcom
| Margin measure | Q2 FY2026 | Q1 FY2027 | Q2 FY2027 |
|---|---|---|---|
| Non-GAAP gross margin rate | 18.7% | 18.1% | 21.1% |
| ISG operating margin | 8.8% | 10.5% | 15.0% |
| CSG operating margin | 6.4% | — | 7.6% |
| Non-GAAP operating margin | 7.7% | — | 12.6% |
Non-GAAP gross margin was 21.1% in the quarter, up 240 basis points from 18.7% a year earlier and up 300 basis points from 18.1% in the first quarter. Gross margin dollars were $9,929 million, up 78%. Kennedy gave the reason in one sentence.
"Gross margin rate was 21.1%, driven by an improvement in ISG margin rate and a higher mix of ISG revenue.
— David Kennedy, Chief Financial Officer, Dell Technologies (Q2 FY2027 earnings call, September 1, 2026)
ISG operating margin 15.0% vs 8.8%
Both halves of that sentence are visible in the segment data. The Infrastructure Solutions Group earned a 15.0% operating margin against 8.8% a year ago and 10.5% in Q1, and it produced 81% of segment operating income, up from 65% a year earlier. ISG was 67.7% of total revenue. Non-GAAP operating margin for the company was 12.6%, which is $5,929 million on $46,971 million, against 7.7% a year ago.
Opex at 8.5% of revenue and the full-year 'approximately 8%' guide
Operating expenses were $4.0 billion, 8.5% of revenue, down 250 basis points according to Kennedy. The full-year guide is approximately 8% of revenue. Kennedy put that in historical context: 'Our full year operating expense rate guidance of approximately 8% of revenue is the lowest level in the company's 42-year history.'
Direction, not level: why 21% and 75% are not comparable
This is where the series through-line turns. NVIDIA guided its non-GAAP gross margin down from 75.0% toward a 71% to 72% trough, citing component cost inflation, and Broadcom's Q3 FY2026 results walked its gross margin from 78.4% a year earlier toward about 73% guided on XPU memory mix. Dell's rate went the other way. One sentence of caution is required: a 21% gross margin at a hardware assembler and a 75% gross margin at a chip designer are not a like-for-like comparison, and nothing here compares the levels. The comparison is direction only, and each company's explanation is its own executive's.
One way to read the direction: mix and operating leverage are doing exactly what an assembler's model is supposed to do at scale, with a richer ISG mix, a better ISG rate, and a fixed cost base spread over 58% more revenue. Another: the rate rose in a quarter when inventory doubled since the fiscal year-end and component costs were rising by management's own account for traditional servers, so what the $95 billion backlog will earn when it ships is not yet in these margins.
CSG: guidance to moderate
The Client Solutions Group earned a 7.6% operating margin against 6.4%. Kennedy guided CSG revenue 'up roughly 15%' for the year with the operating income rate 'to moderate to roughly 6%', and Clarke said the PC market showed 'signs of softening in the second half'. Those are guidance and commentary, not results.
The Cash: Operating Cash Flow Fell, and What 'Adjusted' Adds Back
The income statement and the cash-flow statement moved in opposite directions this quarter, and the gap between them is where the ramp shows up.
| Cash-flow line (USD millions) | Q2 FY2026 | Q2 FY2027 | Change |
|---|---|---|---|
| Operating cash flow | 2,543 | 2,225 | −12.5% |
| Capital expenditures and capitalized software | 675 | 1,239 | +83.6% |
| Free cash flow | 1,868 | 986 | −47.2% |
| Adjusted free cash flow (Dell's definition) | 2,518 | 8,149 | +224% |
| Share repurchases | 940 | 3,796 | +304% |
| Dividends paid | 366 | 405 | +11% |
Operating cash flow was $2,225 million, down 12.5% year over year, in a quarter when revenue rose 58% and GAAP net income rose 255%. Operating cash flow was 54% of net income. Free cash flow after $1,239 million of capital expenditures was $986 million.
$986M free cash flow to $8,149M adjusted
Dell's headline cash figure is 'adjusted free cash flow' of $8,149 million. The reconciliation is in the release.
| Reconciliation (USD millions) | Q2 FY2027 |
|---|---|
| Free cash flow | 986 |
| Plus: financing receivables | 6,667 |
| Plus: equipment under operating leases | 496 |
| Adjusted free cash flow | 8,149 |
Dell's own definition of the two add-backs reads: 'Financing receivables represent the operating cash flow impact from the change in financing receivables. Equipment under operating leases represents the net impact of capital expenditures and depreciation expense for leases.' The $6,667 million add-back is, in plain terms, cash that Dell Financial Services extended to customers during the quarter. Neither $986 million nor $8,149 million is 'the real' figure; they measure different things, and the release presents both.
Kennedy addressed the financing line when Wamsi Mohan of Bank of America asked about it on the call.
"The growth in financing receivables is effectively driven by the growth in the overall business, and it's anchored obviously in the expansion of AI.
— David Kennedy, Chief Financial Officer, Dell Technologies (Q2 FY2027 earnings call, September 1, 2026, answering Wamsi Mohan of Bank of America)
In the same answer he said 'our involvement will continue to be selective' and that it is 'primarily focused on short-term financing and offerings', and he described net income to adjusted free cash flow as 'over 1x'.
Inventories, receivables and payables since January 30
The balance sheet shows where the operating cash went.
| Balance-sheet line (USD millions) | January 30, 2026 | July 31, 2026 | Change |
|---|---|---|---|
| Inventories | 10,437 | 21,290 | +10,853 (+104%) |
| Accounts receivable, net | 17,585 | 22,918 | +5,333 |
| Short-term financing receivables, net | 8,458 | 12,805 | +4,347 |
| Accounts payable | 33,630 | 49,723 | +16,093 |
| Short-term deferred revenue | 13,334 | 14,761 | +1,427 |
| Total debt | 31,503 | 34,466 | +2,963 |
| Cash and equivalents | 11,528 | 11,569 | +41 |
Inventories doubled over six months, and $6,238 million of that increase came in the second quarter alone, from $15,052 million at May 1. Accounts payable rose $16,093 million over the same six months, $4,462 million of it in the second quarter. In words: Dell is holding far more parts and finished goods, customers and financed customers owe it more, and suppliers are owed considerably more than they were.
Repurchases of $3,796M alongside net borrowing of $3.4B
Share repurchases were $3,796 million in the quarter against $940 million a year ago, and dividends paid were $405 million. Kennedy described the step-up: 'in Q2, we oversaw a $2.2 billion quarter-on-quarter increase on a $1.6 billion baseline to drive over $3.9 billion of share repurchase. That's almost 2x any previous spend that we've done in our history.' The release and Kennedy describe 'a record $4.3 billion returned to shareholders'; that figure is Dell's. The two cash-flow-statement lines, repurchases and dividends, sum to $4,201 million.
In the same quarter, proceeds from debt were $4,386 million and repayments were $1,017 million, a net $3,369 million of new borrowing. Total debt rose from $31,503 million to $34,466 million since the fiscal year-end, and cash was essentially flat, with a net change in cash of −$16 million for the quarter. The quarter's record repurchase was therefore accompanied by net borrowing of a similar size. Management did not describe the two as linked, and neither does this article.
For the six months, operating cash flow was $6.3 billion, free cash flow $4.1 billion, adjusted free cash flow $11,314 million, repurchases $5,424 million and dividends $869 million.
Dividend: $0.63, record date October 20, payable October 30
Dell declared a quarterly dividend of $0.63 per share on September 1, with a record date of October 20 and a payment date of October 30, 2026.
Where this sits in the series
Three cash-flow statements, three different shapes. NVIDIA's second-quarter working-capital build absorbed most of its cash. Broadcom's operating cash flow exceeded its net income. Dell's quarter sits on the NVIDIA side of that line. One way to read it: inventory and receivables are the working-capital cost of a supply-constrained ramp against a $95 billion backlog, and the $16.1 billion rise in payables shows suppliers funding much of it. Another: non-GAAP EPS rose 203% while operating cash flow fell, the record buyback coincided with net borrowing of similar size, and the headline 'adjusted' cash figure depends on adding back customer financing.
Segments in Detail: ISG, CSG and the Product/Services Split
| Segment (USD millions) | Q2 FY2026 | Q2 FY2027 | YoY |
|---|---|---|---|
| ISG revenue | 16,800 | 31,782 | +89% |
| of which AI-optimized servers | 8,208 | 16,401 | +100% |
| of which traditional servers and networking | 4,736 | 10,531 | +122% |
| of which storage | 3,856 | 4,850 | +26% |
| ISG operating income | 1,470 | 4,781 | +225% |
| CSG revenue | 12,503 | 15,034 | +20% |
| of which commercial | 10,781 | 13,192 | +22% |
| of which consumer | 1,722 | 1,842 | +7% |
| CSG operating income | 803 | 1,142 | +42% |
AI-optimized servers, traditional servers and storage
The release claims records for ISG revenue, traditional server revenue, storage revenue, ISG operating income, AI server orders, AI server revenue and AI backlog. Traditional servers and networking, up 122%, is the line that surprised beyond AI. Clarke, answering Amit Daryanani of Evercore, attributed that demand to modernization of an installed base of 1.2 million assets of 14th generation or older, to security and compliance mandates, and to agentic workloads, and said: 'We are seeing customers investing more than they plan to in infrastructure.' As noted above, he also said those configurations cost more than they did in each of the prior three quarters, and Dell does not split the growth between price and units.
On the customer base, Clarke gave one set of figures: 'We now have more than 6,500 customers buying Dell AI Factory. 3,300 of them have happened in the last 3 quarters that took us 8 quarters to get to the first 3,200.' The customer types he named were enterprise, neoclouds and sovereigns. No individual customer is named in the release or the call.
CSG: commercial up 22%, consumer up 7%, 'softening' in H2
Client revenue rose 20% to $15,034 million, with commercial up 22% to a record $13,192 million and consumer up 7% to $1,842 million. CSG operating income was $1,142 million at a 7.6% margin. Clarke's comment about PC-market softening in the second half and Kennedy's guide for the CSG rate to moderate to roughly 6% frame the segment going forward.
One further fact of the release: products revenue was $41,112 million, up 72%, while services revenue was $5,859 million, flat year over year. The growth in this quarter was hardware.
How the Stock Reacted: Four Sessions, One New High
| Session | Close | Change | Volume |
|---|---|---|---|
| September 1 (report day, before the release) | $425.00 | −6.80% | 15.9M |
| September 2 | $492.20 | +15.81% | 36.7M |
| September 3 | $516.39 | +4.91% | 20.3M |
| September 4 | $524.14 | +1.50% | 11.1M |
| September 8 (after Labor Day) | $533.88 | +1.86% | 6.6M |
Report day: −6.80% before the release
The stock fell 6.80% to $425.00 on September 1 on 15.9 million shares, about three times the 5.36 million-share average of the previous 22 sessions. That session closed before the results were published, so whatever moved it, the quarter was not yet public. The report-day close was 14.1% below the previous closing high of $494.51 set on August 13.
September 2 to September 8
On September 2 the stock opened at $462.05, 8.72% above the report-day close, traded as high as $497.99 and as low as $432.27, and closed at $492.20, up 15.81%, on 36.7 million shares, roughly 6.9 times the 22-session average. On September 3 it closed at $516.39, up 4.91%, with an intraday high of $530.78; that close was 4.4% above the August 13 high and set a new closing high. September 4 added 1.50% to $524.14, and September 8, the first session after the Labor Day holiday, added 1.86% to $533.88.
Four sessions after the print, the stock stood 25.62% above its report-day close and 7.96% above its prior closing high. From the December 31, 2025 close of $125.88, it was up 324.1% at the September 8 close, consistent with Reuters' description of a stock that has 'more than tripled this year'. At 651 million diluted shares, the count Kennedy guided for Q3, the September 8 close implies a market capitalisation of approximately $347.6 billion; that is arithmetic, not a company figure. Past performance does not guarantee future results. What moved any single session is not established here; the analyst notes below are what the named firms themselves wrote.
What Analysts Changed
Seven firms raised price targets in the two sessions after the print, and all seven maintained their ratings.
| Firm | Rating | Price target change |
|---|---|---|
| Melius Research | Buy (maintained) | $650 to $735 |
| JPMorgan | Overweight (maintained) | $565 to $635 |
| Barclays | Overweight (maintained) | $550 to $603 |
| Bank of America | Buy (maintained) | $505 to $600 |
| Citi | Buy (maintained) | $515 to $600 |
| Piper Sandler | Overweight (maintained) | $497 to $558 |
| Morgan Stanley | Equal Weight (maintained) | $434 to $499 |
Wamsi Mohan of Bank of America based the $600 target on about 20 times a fiscal 2028 EPS estimate raised to $30.41 from $24.67, and wrote that demand 'continues to outpace supply'. JPMorgan's note, from analyst Joseph Cardoso according to TipRanks, called it 'another robust quarter'. Citi called it a 'clear beat' amid 'surging' demand. The lowest of the seven new targets, Morgan Stanley's $499, sat below the September 8 close of $533.88; the highest, Melius Research's $735, sat above it. These are the firms' targets and opinions, attributed to them, and not price targets or recommendations made here.
Continuity With the May Print
Dell reported its fiscal first quarter, the period to May 1, 2026, after the close on May 28. Revenue was $43.8 billion, up 88%; GAAP EPS was $5.24 and non-GAAP EPS was $4.86, against a captured consensus of $3.00, a 62.08% surprise. AI orders were $24.4 billion, AI server revenue $16.1 billion, non-GAAP gross margin 18.1%, ISG operating margin 10.5%, and operating cash flow $4.1 billion. The guidance set that day, $167.0 billion of revenue, approximately $60 billion of AI server revenue, $17.31 of GAAP EPS and $17.90 of non-GAAP EPS, is what this quarter raised to $192.0 billion, $74 billion, $24.37 and $25.50. Kennedy described the revenue raise as 'up nearly 70% year over year'.
The stock's path after the May print is the reference for the September one. From a May 28 close of $317.05 it rose 32.76% to $420.91 on May 29 on 41.8 million shares, then 10.70% to $465.96 on June 1, a two-session gain of 46.97%. It did not close above $465.96 again until August 4, at $467.27. What drove the June and July decline is not established by the company's filings.
EPS surprise history: four beats in five
| Fiscal quarter | Estimate | Actual | Surprise |
|---|---|---|---|
| Q2 FY2026 | $2.35 | $2.32 | −1.18% |
| Q3 FY2026 | $2.52 | $2.59 | +2.72% |
| Q4 FY2026 | $3.60 | $3.89 | +8.11% |
| Q1 FY2027 | $3.00 | $4.86 | +62.08% |
| Q2 FY2027 | $5.01 | $7.04 | +40.46% |
Four beats in five prints, with the two largest the last two. A reader interested in how post-earnings moves relate to surprise size can compare the May reaction (+46.97% over two sessions on a +62.08% surprise) with the September one (+25.62% over four sessions on a +40.46% surprise); that is a description of two data points, not a pattern.
What the Next Print Will Test
The third quarter ends at the end of October 2026, within a fiscal year Dell states closes on January 29, 2027. Dell's guide for the quarter is $49.0 billion of revenue, $6.50 of non-GAAP EPS and, per Kennedy, $19 billion of AI server revenue. Several lines in this quarter's statements are the ones to compare against when it reports.
- AI server revenue against the $19 billion expectation. Q1 was $16.1 billion and Q2 was $16.4 billion. Whether Q3 steps up is the direct test of whether the shipment ceiling Clarke described has lifted.
- The backlog after the next quarter's orders and shipments. The $95 billion figure is the starting point; the next release will show whether orders keep outrunning the factory.
- Gross margin rate against 21.1%. Kennedy attributed the rise to ISG rate and mix. The next quarter shows whether that held as the backlog started to ship and component costs moved.
- Operating cash flow against $2,225 million, and inventories against $21,290 million. Whether the working-capital build continues, stabilises or unwinds is the question the cash-flow statement will answer.
- Financing receivables against $12,805 million. Kennedy called DFS involvement 'selective' and 'short-term'; the balance sheet will show the size of the next step.
Each of these is a company-reported figure, so next quarter's number can be placed beside this one without any model in between. The competing readings set out above for the backlog, the margin and the cash are ways of interpreting those comparisons; which one the figures end up supporting is what the next print will show.