Dell Technologies boosts annual profit expectations amid AI server surge

Dell recorded revenue of $23.4bn in the first quarter of fiscal year 2026. (Photo: JHVEPhoto/Shutterstock)

Dell Technologies has revised its annual profit expectations upwards, driven by strong demand for its AI-enabled servers equipped with Nvidia’s advanced chipsets. The latest projection anticipates a $9.4 per share non-GAAP adjusted profit, edging past its prior estimate of $9.3 per share while maintaining its revenue outlook.

For the upcoming second quarter of fiscal year 2026, Dell projects revenues in the range of $28.5bn to $29.5bn. This substantially exceeds the analyst consensus of $25.05bn, according to LSEG data. The anticipated second-quarter non-GAAP adjusted profit of $2.25 per share also surpasses market expectations pegged at $2.09.

“We achieved first-quarter record servers and networking revenue of $6.3bn, and we’re experiencing unprecedented demand for our AI-optimised servers,” said Dell vice chairman and chief operating officer Jeff Clarke. “We generated $12.1bn in AI orders this quarter alone, surpassing the entirety of shipments in all of FY25 and leaving us with $14.4bn in backlog.”

Despite narrowly missing Wall Street’s earnings estimates for its fiscal first quarter, Dell exceeded sales projections and offered upbeat guidance for the current quarter, propelling a 2% uptick in its stock in after-hours trading. In Q1, ending 2 May, Dell posted an adjusted earnings figure of $1.55 per share on a revenue of $23.38bn. FactSet analysts had forecast earnings of $1.7 per share with sales hitting $23.18bn. Annual comparisons reveal a 17% hike in earnings and a 5% rise in sales.

Looking further ahead to fiscal 2026, Dell anticipates revenues between $101bn and $105bn, reflecting an 8% year-over-year (YoY) growth at a midpoint of $103bn. The GAAP diluted earnings per share (EPS) is expected to land at about $7.99, which marks a 25% increase.

For the second quarter of fiscal 2026, GAAP EPS has been projected at a midpoint increase of 50% to reach $1.85.

Dell’s servers seem to be garnering significant traction among high-profile clients such as Elon Musk’s AI startup xAI and CoreWeave, contributing to its positive stock performance post-market closure.

In parallel developments, the US Department of Energy recently disclosed plans to deploy Doudna, a next-generation supercomputer integrating Dell and Nvidia technology for highly complex computational workloads.

Details of Dell’s Q1 fiscal 2026 results

Overall, Dell’s Q1 fiscal 2026 results reveal a year-over-year growth of 5% in revenue. The firm’s operating income surged by 21% to reach $1.2bn, with non-GAAP operating income climbing by 10% to reach $1.7bn. Diluted EPS remained steady at $1.37.

Its Infrastructure Solutions Group reported a revenue climb of 12%, reaching $10.3bn. Servers and networking sub-division set a first-quarter record for Dell with a 16% jump. The company’s storage unit saw a 6% uptick hitting the $4bn mark, yielding operating income growth of 36% year-over-year.

Meanwhile, the Client Solutions Group posted revenues totalling $12.5bn, up by 5% YoY. Commercial client revenue grew by 9%, standing at $11bn. However, consumer revenue dropped by 19%, landing at $1.5bn alongside a yearly operating income decline of 16%, equating to $653m.

Read more: Dell Technologies cuts workforce by 12,000 in fiscal year 2025