Key highlights:

  • DELL stock jumped 10% on the release of its Q2 earnings
  • Revenue climbed 58% year over year to about $47 billion, beating estimates
  • Full-year guidance was also raised for the second straight quarter

Dell jumped about 10% in after-hours trading on Wednesday after the company delivered fiscal second-quarter results that beat almost every Wall Street estimate. The stock had closed the Tuesday trading session down almost 7% before recovering.

 

Dell’s earnings beat expectations by a wide margin

The company's guidance heading into the quarter had been more conservative than what it then delivered. Management had projected revenue of $44 billion to $45 billion and adjusted earnings of $4.80 a share in May. However, the new results crushed those targets.

Adjusted earnings per share reached $7.04, beating the $4.90 to $4.92 range analysts had predicted. Dell’s revenue for the quarter, which ended July 31, came in at $47 billion, up 58% from a year earlier and ahead of most Wall Street forecasts. Net income also tripled from the same period last year.

Margin pressure had been the bone of contention before the report was released. Memory chip costs climbed through the year. AI servers, on the other hand, usually see smaller profit margins than storage hardware or personal computers. Those cost pressures did not affect the company’s earnings.

Dell’s Infrastructure Solutions Group, which covers data-center hardware, posted revenue of $31.8 billion, up 89% year over year. The group’s AI-optimized servers alone saw $16.4 billion in revenue, which was double what they brought in a year earlier. 

Storage revenue also rose by 26% to $4.9 billion while the sales of PCs and accessories to consumers and businesses brought in $15 billion, up 20%.

Management lifts guidance as AI backlog piles on

Dell booked $60.9 billion worth of AI server orders during the quarter and closed it with a $95 billion backlog, up from $51.3 billion three months earlier. The difference between orders and what can be shipped suggests demand is well ahead of supply.

As a result of this demand, management raised its full-year guidance for the second consecutive quarter. Fiscal 2027 revenue was projected to hit $192 billion, up from the previous $167 billion. This also implies a year-over-year growth of 70%. 

Adjusted earnings guidance was lifted to $25.50 per share, which is a growth of around 150% from the year before. Full-year AI server revenue is projected at $74 billion, up from an estimate of $60 billion.

For the fiscal third quarter, Dell guidance calls for $49 billion in revenue and $6.50 in adjusted earnings per share. Some of this growth can also be attributed to President Trump’s endorsement of Dell computers.

Wall Street reacts with bullish notes

The earnings report led to an optimistic response from analysts. CNBC's Jim Cramer summed up his reaction in a single word: "WOW." 

Other experts highlighted the company's supply chain and product portfolio as reasons the momentum could continue. Founder and CEO Michael Dell also shared his thoughts after the results were released.

DELL stock has now climbed over 230% since the start of the year, outpacing the overall market. Recent contract wins, including a $9.7 billion software deal with the U.S. military and a large hardware order from a cloud infrastructure provider, add to its bullish case heading into the second half of the fiscal year.