Enterprise
Dell Q2: Exceptional AI Growth yet AI Margins Miss the Mark
Dell raised AI server shipments for the fiscal year from $15 billion to $20 billion, for a raise of 33%. AI servers are expected to account for nearly 19% of Dell’s revenue in FY26 following ISG growing an impressive 63% QoQ. Management stated it was the “single largest number of customers that we sold in a quarter” and “it is the most revenue we generated to enterprise customers in a quarter to date.” The size of AI revenue is impressive and ranks Dell in the top 10 companies on the public markets by size of AI revenue. Consider that Broadcom will deliver a similar number this year. However, the key difference with Dell is the margins are slim – with one analyst asserting that AI server margins could be as low as 2.5% calculated off the guide. The GAAP numbers show gross margin dipped although operating margin held steady. The CFO did state margins would improve into the second half. We look at the and more below!
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