OpenAI CEO Sam Altman lately admitted that “investors as a whole are overexcited about AI.” This overexcitement has led some buyers to view tech firms that do not make synthetic intelligence {hardware} or software program as “legacy tech.”
Dell is an organization that does not make GPUs or AI accelerators and is not precisely recognized for software program. A superficial view would possibly produce a deceptive impression that it’s not an AI firm.
However though Dell is not making AI accelerators, it makes full options based mostly on them, which is why it’s an AI firm.
ResearchAndMarkets.com’s report, “AI Data Center—Company Evaluation Report, 2025,” ranks Dell as one in all three prime firms within the AI knowledge middle house.
Dell is one in all three prime firms within the AI knowledge middle house.
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Dell Q2 income grows 48% to $1.004 billion yr over yr
On August 28, Dell (DELL) reported its outcomes for Q2 of fiscal 2026.
Dell Chief Working Officer Jeff Clarke mentioned the corporate shipped $10 billion of AI options within the first half of fiscal yr 2026, exceeding all shipments from final yr.
He added that demand for Dell’s AI options continues to be distinctive, and that the corporate is elevating its AI server cargo steering for fiscal yr 2026 to $20 billion.
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Dell earnings highlights:
- Document income of $29.8 billion, up 19% year-over-year
- Working earnings of $1.8 billion, up 27% YoY
- Diluted earnings per share (EPS) of $1.70, up 38% YoY
- Money circulation from operations of $2.5 billion
Dell supplied an outlook for Q3 of fiscal yr 2026:
- Income of between $26.5 billion to $27.5 billion
- Diluted EPS anticipated to be $2.07 on the midpoint, up 26% YoY
Dell’s outlook for the complete fiscal yr 2026:
- Income of between $105.0 billion and $109.0 billion
- Diluted EPS anticipated to be $7.98 on the midpoint, up 25% YoY
Throughout the earnings name, Clarke acknowledged: “As I mentioned last quarter, our execution in AI continues to be a key differentiator. We are innovating at an unprecedented pace, engineering at scale solutions for customers while remaining agile to rapidly changing customer road maps and architectures.
“We had been the primary on this planet to ship each the NVIDIA GB200 NVL72 resolution final yr, and the GB300 NVL72 in July to CoreWeave,” he continued.
Dell announces CFO transition
On Sept. 8, Dell announced that Chief Financial Officer Yvonne McGill will step down from her role effective Sept. 9, 2025. The company has named David Kennedy, senior vice president, Dell Global Business Operations, Finance, as interim CFO effective Sept. 9, 2025.
McGill will serve in an advisory capacity through Q3 fiscal 2026 to facilitate a seamless transition. The company reaffirmed its guidance for fiscal 2026 Q3 and full year.
Analysts expect Dell guidance for faster revenue and EPS growth
Bank of America analyst Wamsi Mohan and his team updated their opinion on Dell shares following the CFO departure announcement.
Analysts expect Dell to highlight its long-term guidance and capital allocation framework at the Securities Analyst Meeting (SAM) on October 7.
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Dell guidance given at the 2023 SAM was:
- 3% to 4% YoY revenue growth
- 8%+ non-GAAP EPS growth
- Net income to adjusted free cash flow conversion of 100%+
- Returning 80%+ adjusted free cash flow to shareholders
- 10%+ dividend growth through fiscal year 2028
Mohan and his team expect guidance for faster revenue and EPS growth relative to the last model on the upcoming analyst day.
Analysts noted downside risk factors for Dell:
- Faster-than-expected slowdown in the global economy
- Faster-than-expected strengthening of the U.S. dollar
- Trade war with China
- Higher-than-expected tariffs
- Dell not being able to source needed processors from Intel
- Unexpected share loss to competitors
Dell upside risks:
- Faster-than-expected revenue growth and market share gain,
- Faster mix shift to storage and premium PC and server configurations
- Faster-than-expected ramp of sales teams
- Adoption of AI that can drive upside to cash flow across PCs and servers
Mohan reiterated a buy rating and a target price of $167, based on a 15 multiple of his estimate of earnings per share of $11.13 for calendar year 2026. His target multiple compares to the median 5 multiple of Dell’s historical range of 3 to 18 since it returned to the public markets in 2019.
Mohan’s team believes that multiple higher than the historical range is warranted, given favorable exposure to AI, improved storage portfolio, and lower financial leverage, as Dell balances opportunities to invest in core growth areas, with ongoing weak macro.
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