Sep 1, 2026 earnings call — AI server surge and data center modernization
Record quarter: total revenue $47 billion and diluted EPS $7.04, driven by ISG strength and AI server demand.
Revenue $47.0B (est $44.9B) · EPS $7.04 (est $4.91)
Key quotes
"In Q2, we booked a record $60.9 billion in AI orders and recognized $16.4 billion in AI server revenue."
"With the majority of the installed base still on 14th generation or older servers, we see a significant and durable refresh opportunity ahead."
"Storage revenue was $4.9 billion, up 26%, with strong demand across the Dell IP portfolio, driving revenue growth and significant margin contribution."
Analyst Q&A 10
Why non-AI server and storage grew
Q (Amit Daryanani · Evercore): Analyst asked if traditional server and storage growth was driven by pricing or one-time prebuys versus real demand, and what workloads and durability are behind it.
A: Management said the growth is driven by data center modernization and consolidation, which increases demand for higher-core, higher-DRAM, higher-storage servers. They noted a large installed base to upgrade and cited security and AI agent workloads as additional durable demand drivers. They also said Dell IP storage products are gaining share and growing across customer sizes.
"It is increasing space, driving power efficiency and cooling, and it's obviously driving demand." — Jeffrey Clarke
Longer-term growth outlook
Q (Benjamin Reitzes · Melius): Analyst asked if Dell could sustain very high growth next year similar to GPU vendors and whether Dell should expect Nvidia-like growth long-term.
A: Management said they see durable demand and strong pipeline momentum and want to execute a strong second half to position for continued growth. They pointed to large multi-quarter order and pipeline metrics and painted a long-term picture where agentic AI reshapes the data center, driving large increases in inference and training demand and a multi-year opportunity.
"And then if you believe that demand is there, it drives more servers, the agentic workload, and it drives more data around that agentic workload growing each of those areas for us as well." — Jeffrey Clarke
Who is buying traditional and AI servers
Q (Mark Newman · Bernstein): Analyst asked whether the traditional server growth is still mostly enterprise and how the customer mix looks for AI servers (enterprise versus neoclouds/Tier 2 CSPs).
A: Management said the 122% traditional server growth is primarily from historical enterprise customers and that demand outstripped supply. They added AI servers are appearing across neoclouds, high-frequency trading customers, and very advanced enterprise customers, and noted strong enterprise acceleration in Dell AI Factory with many repeat buyers.
"So vast majority of that 122% growth are traditional customers across all segments, all geos." — Jeffrey Clarke
Why margins outperformed (storage, PCs)
Q (Katherine Murphy · Goldman Sachs): Analyst asked how enterprise pull-through of networking, storage and PCs contributed to margin outperformance and whether this implies structurally higher margins going forward.
A: Management said the main driver of margin improvement is scale and operating leverage from growth. They also cited mix shift to higher-margin Dell IP storage as a major contributor and pointed to product mix and higher-end storage selling that raises margins. Management noted specific margin tailwinds from added storage revenue and continued operating-leverage in PCs.
"But the single biggest lever of the operating margin improvement in the company is scale, operating leverage." — Jeffrey Clarke
Deferred orders and financing receivables
Q (Wamsi Mohan · BofA): Analyst asked whether customers were deferring purchases because they could not flex budgets to meet price increases, and about the rise in financing receivables.
A: Management said buying behavior varies: public sector and SMBs buy to fixed budgets, while large sophisticated customers are often accelerating investments and placing orders further in advance to secure supply. On financing, they said financing receivables rose mainly because the business grew, noted selective short-term DFS financing, and cited strong cash flow enabling large share repurchases with exact quarter figures.
"They are placing their orders further in advance to ensure they have access to that supply." — Jeffrey Clarke
Storage attach to AI servers runway
Q (Erik Woodring · Morgan Stanley): Analyst asked whether AI server growth is starting to drive a sustained storage attach opportunity and how long that runway might be.
A: Management said AI agents create more data (files, logs, traces) that must be retained and protected, which adds new, durable storage demand. They cited KV cache use, future physical AI and IoT sensors producing large multimodal unstructured data, and described plans for data management and a semantic layer to capture that opportunity. They said Dell is well positioned across storage assets to benefit.
"So we see multiple new lines or new paths for storage growth in our businesses." — Jeffrey Clarke
Current supply constraints
Q (Asiya Merchant · Citi): Analyst asked what parts of the supply chain remain constrained and whether anything changed versus last quarter.
A: Management said supply is still insufficient and that they are optimizing configurations and prioritizing infrastructure to maximize factory output. They listed the main constraints as DRAM, then NAND, spotty CPU shortages, disk drives, and many mature node components and substrates, while the AI supply chain is working at full capacity to build racks and power infrastructure.
"The constraints remain the same. DRAM, DRAM, DRAM, followed by NAND, NAND, NAND." — Jeffrey Clarke
Lightning parallel file system status
Q (Michael Tsvetanov · Wells Fargo): Analyst asked how Lightning (parallel file system for AI) is contributing and how much it attaches to cloud AI server deals.
A: Management said Lightning is a native AI parallel file system that is in the field and drawing interest but is still relatively new. They said it's in beta at several customers, currently in runoffs against competitors, and they will provide updates as it builds momentum.
"It's still a relatively new product. It's in beta at several customers." — Jeffrey Clarke
Volume vs pricing in growth
Q (Joseph Cardoso · JPMorgan): Analyst asked how much of the traditional server and storage growth was volume versus pricing, whether customers can absorb higher prices, and whether management sees pushback.
A: Management said much growth reflects modernization configurations with higher-core counts, more DRAM and storage, so there is an inflation component as input costs rise, but underlying demand remains significant. For storage, shifting from partner IP to Dell IP drives higher revenue and margin per unit and software-defined products add incremental business. They reiterated demand has outpaced supply and the pipeline remains robust.
"Those products are -- those configurations are part of this modernization or consolidation, and they continue to grow rapidly." — Jeffrey Clarke
Margin uplift: modernization vs scale
Q (David Vogt · UBS): Analyst asked how much margin uplift comes from like-for-like modernization to next-gen servers versus efficiency and scale gains from volume.
A: Management said scale and operating leverage are the #1 drivers and quantified that scale drove just over 400 basis points in ISG and is worth over 650 basis points on the full-year guide. They added that incremental storage revenue (about $2.5 billion year-on-year) and mix, pricing discipline, and operational rigor also contribute to margin expansion.
"That for the ISG business was a driver of just over 400 basis points." — David Kennedy