AI Takeaway
Dell Technologies delivered exceptional Q2 FY2026 results with revenue surging 87.5% YoY to $43.8B and net income jumping 256.3% to $3.4B, driven by explosive AI infrastructure demand, though gross margin compressed 3.4 percentage points to 17.75%.
Revenue
$43.84B
++87.54% YoY
EPS (Basic)
$5.30
++281.29% YoY
Gross Margin
17.8%
-3.37% YoY
Operating Income
$3.66B
++213.82% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Total revenue nearly doubled YoY, rising 87.5% from $23.4B to $43.8B, reflecting surging enterprise demand for AI servers and infrastructure solutions. This growth rate is exceptional for a company of Dell's scale and signals strong positioning in the AI hardware buildout cycle.
Source: Source: 10-Q Income Statement (XBRL Financial Data)
Operating income surged 213.8% YoY from $1.2B to $3.7B, with operating margin expanding 3.4 percentage points to 8.3%, demonstrating that revenue growth is outpacing operating expense growth. SG&A grew only 6.0% YoY while revenue grew 87.5%, indicating strong operating leverage.
Source: Source: 10-Q Income Statement (XBRL Financial Data)
Gross margin declined 3.4 percentage points YoY from 21.1% to 17.75%, as cost of revenue grew faster (95.5%) than revenue (87.5%). This compression likely reflects a higher mix of lower-margin AI server hardware, which typically carries thinner margins than software and services.
Source: Source: 10-Q Income Statement & Key Ratios (XBRL Financial Data)
2 more insights available
Upgrade to unlockDell's gross margin fell to 17.75% from 21.1% as high-volume, lower-margin AI server products dominate the revenue mix. If this trend continues, sustained margin compression could offset the benefits of strong top-line growth. The company's ability to improve margins through software, services, and storage attach rates will be critical.
Source: Source: 10-Q Key Ratios & Income Statement (XBRL Financial Data)
Unlock 4 more detailed risk analysis
Upgrade to unlockReported EPS of $4.86 versus the $3.00 analyst consensus — a +62.1% beat for Q1 FY2027.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $43.84B | $23.38B | +87.54% |
Cost of Revenue | $36.06B | $18.44B | +95.54% |
Gross Profit | $7.78B | $4.94B | +57.63% |
Operating Income | $3.66B | $1.17B | +213.82% |
Net Income | $3.44B | $965M | +256.27% |
EPS (Basic) | $5.30 | $1.39 | +281.29% |
EPS (Diluted) | $5.24 | $1.37 | +282.48% |
R&D Expense | $983M | $808M | +21.66% |
SG&A Expense | $3.14B | $2.96B | +6.04% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $114.91B | $86.87B | +32.28% |
Current Assets | $70.61B | $42.92B | +64.49% |
Total Liabilities | $116.32B | $89.89B | +29.39% |
Current Liabilities | $74.6B | $50.42B | +47.95% |
Stockholders' Equity | $-1.4B | $-3.02B | +53.57% |
Cash & Equivalents | $11.58B | $7.7B | +50.36% |
Long-Term Debt | $31.16B | $28.78B | +8.27% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $4.08B | $2.8B | +45.96% |
Investing Cash Flow | $-1.07B | $-88M | -1112.50% |
Financing Cash Flow | $-2.95B | $1.24B | -338.80% |
Share Buybacks | $1.63B | $1.98B | -17.78% |
D&A | $758M | $738M | +2.71% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 17.8% | 21.1% | -3.37% |
Operating Margin | 8.3% | 5.0% | +3.36% |
Net Margin | 7.8% | — | — |
ROE | -244.9% | — | — |
ROA | 3.0% | — | — |
Current Ratio | $0.946 | — | — |
Debt to Equity | $-82.847 | — | — |
Other companies in Technology Hardware, Storage & Peripherals
Dell's revenue grew an extraordinary 87.5% year-over-year in Q2 FY2026, rising from $23.4B to $43.8B. This near-doubling of revenue in a single quarter reflects surging enterprise and hyperscaler demand for AI servers and infrastructure products.
The headline story is explosive AI-driven growth: revenue hit $43.8B (+87.5% YoY), net income surged to $3.4B (+256.3%), and EPS reached $5.30 (+281.3%). However, gross margin compressed 3.4 percentage points to 17.75% as lower-margin AI server hardware dominated the revenue mix, a key trade-off investors should monitor.
Yes, Dell is highly profitable in Q2 FY2026, reporting net income of $3.4B and operating income of $3.7B. Operating cash flow was also strong at $4.1B, confirming that earnings are backed by real cash generation.
Based on the financial data, key risks include gross margin compression (down to 17.75% from 21.1%) from AI server mix shift, a negative stockholders' equity of -$1.4B reflecting Dell's highly leveraged balance sheet with $31.2B in long-term debt, and a current ratio below 1.0 at 0.946 indicating a working capital deficit. Concentration risk in AI infrastructure spending cycles is also a concern given the high revenue base established this quarter.
Dell's operational health is strong with $43.8B in revenue, $4.1B in operating cash flow, and $11.6B in cash on hand. However, its balance sheet carries structural leverage with total liabilities of $116.3B exceeding total assets of $114.9B, resulting in negative stockholders' equity — a long-standing feature of Dell's capital structure that investors should understand in context.