- Record Revenue & EPS Growth Q2 revenue hit $29.8 billion (+19%), driven by 22% growth in ISG/CSG, with EPS at $2.32 (+19%) and net income up 13% to $1.6 billion.
- AI Momentum AI server shipments reached $8.2 billion (nearly half of ISG revenue), with a $11.7 billion backlog and $5.6 billion in Q2 orders. Full-year AI guidance raised to $20 billion.
- Cost Efficiency Operating expenses dropped 4% to $3.3 billion (11% of revenue), while gross margin expanded to 18.7% ($5.6 billion), reflecting operational discipline.
- Full-Year Guidance Raised Revenue target increased to $107 billion (+12%), with ISG/CSG growth at 14% midpoint and AI margins expected to improve via scaling and value engineering.
- Backlog & Market Shifts AI pipeline grew with 6,700+ customers (primarily Blackwell), and traditional server demand rose due to Windows 10 end-of-life, with CSG showing 4 consecutive quarters of P&L growth.
Segment Performance
The company's Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG) businesses both experienced significant growth, with combined revenue up 22% year-over-year. ISG saw strong demand for AI servers, with $8.2 billion in shipments and a backlog of $11.7 billion. CSG revenue was up 1%, with commercial revenue growing 2%. The company is raising its AI server shipment guidance to $20 billion for the year.
AI Server Growth and Profitability
Dell's AI server business is driving significant growth, with nearly half of ISG revenue coming from AI servers in Q2. While AI margins were dilutive due to one-time costs and supply chain expenses, the company expects margins to improve through value engineering, scaling, and expanding its enterprise customer base.
Valuation and Outlook
Using the current price, Dell's P/E Ratio is 18.58, and its P/S Ratio is 0.87. The EV/EBITDA ratio is 10.42. With the company's guidance for continued growth in ISG and CSG, as well as improving profitability, the stock may be poised for further upside. Analysts estimate next year's revenue growth at 9.1%. The company's focus on profitable growth and driving efficiency through the business is expected to drive improved margins and EPS growth.
Guidance and Expectations
Dell expects Q3 revenue to be between $26.5 billion and $27.5 billion, up 11% at the midpoint. ISG and CSG combined are expected to grow 13% at the midpoint, with ISG growing in the low 20s and CSG up mid-single digits. The company is raising its full-year revenue guidance to $107 billion, up 12%. Operating income is expected to be up roughly 7%, with diluted non-GAAP EPS expected to be $2.45, plus or minus $0.10.