To The Moon

$Dell Technologies Inc.(DELL)$ is set to report its fiscal Q2 2026 earnings after the market closes on Thursday, August 28, 2025.

Revenue: Analysts are expecting strong year-over-year growth, with a consensus revenue forecast of approximately $29.1 billion. This aligns with Dell's own guidance of $28.5 billion to $29.5 billion. The focus will be on the Infrastructure Solutions Group (ISG), which includes AI servers. Analysts are projecting ISG revenue to grow by a substantial 27% year-over-year to nearly $16 billion.

Earnings Per Share (EPS): The consensus for adjusted EPS is $2.28, which is at the high end of Dell's guidance of $2.25 (plus or minus 10 cents). A beat on this number would be a significant positive signal.

Summary of Dell Technologies (DELL) Fiscal Q1 2026 Earnings

Dell Technologies reported strong results for its fiscal first quarter of 2026, which ended on May 2, 2025. The report highlighted the company's successful pivot towards AI infrastructure, which is driving significant growth, while its core PC business is also showing resilience.

Financial Performance: Dell's total revenue for the quarter was $23.4 billion, representing a 5% year-over-year increase and beating analyst consensus. Non-GAAP diluted earnings per share (EPS) were $1.55, up 17% year-over-year. While revenue exceeded expectations, EPS slightly missed some analysts' estimates.

Infrastructure Solutions Group (ISG): This was the star of the quarter. ISG revenue grew by a remarkable 12% year-over-year to $10.3 billion. The growth was primarily fueled by AI-optimized servers, with Dell reporting a record $12.1 billion in new AI orders in Q1 alone. This single-quarter figure for orders surpassed the total AI server shipments for the entirety of fiscal year 2025, leaving Dell with a substantial AI server backlog of $14.4 billion.

Client Solutions Group (CSG): Dell's PC business showed signs of stabilization. CSG revenue increased by 5% year-over-year to $12.5 billion. This was driven by a strong 9% growth in commercial client revenue, which is now in its fifth consecutive quarter of year-over-year growth. However, the consumer market remained challenged, with consumer revenue declining by 19%.

Capital Allocation: The company demonstrated robust cash flow generation, with a record Q1 cash flow from operations of $2.8 billion. Dell returned a record $2.4 billion to shareholders through share repurchases and dividends.

Lesson Learned from the Guidance

Dell's guidance for fiscal Q2 and the full year 2026 provides several key lessons for investors:

The AI Boom is Real, But Shipments are Not Linear: Dell's management explicitly stated that while AI demand is "unprecedented," the nature of these large-scale projects means that the timing of shipments can be "non-linear." This is a crucial takeaway. It means that Dell will not necessarily ship a consistent amount of its massive backlog each quarter. The guidance for Q2 revenue, for instance, implies a significant sequential leap from Q1, reflecting the ramping up of AI server shipments. This indicates that investors should not expect a steady, predictable pace of backlog conversion, but rather a lumpy, project-based delivery schedule.

Profitability in AI is a Key Challenge: While the AI server business is driving impressive revenue growth, it is a high-cost endeavor. Dell's guidance implies that while revenue will soar, the profitability of this business is a key factor to watch. This is a common theme with companies in the AI supply chain—the race to deliver on demand can compress margins. The market will be watching to see if Dell can maintain or even expand its profitability as it fulfills its massive AI server backlog.

The Hybrid Nature of Dell's Business is a Strength: The Q1 results reinforced the value of Dell's diversified business model. The stability and slight growth in the commercial PC market (CSG) provide a reliable base of revenue and cash flow. This steadiness allows the company to invest in and manage the highly volatile, high-growth AI server business (ISG) without excessive risk. This hybrid model allows Dell to capture the AI trend while not being fully exposed to its inherent volatility.

In summary, Dell's Q1 report showed that the company is successfully executing its transition to an AI infrastructure leader, evidenced by the staggering demand and backlog for its AI servers. However, the guidance taught investors to be patient with the non-linear nature of AI-related shipments and to closely monitor the profitability of this key growth driver going forward.Key Metrics and Analyst Expectations

The central theme for Dell's upcoming earnings report is the company's transformation from a PC-focused business to a leader in AI infrastructure. Last quarter, Dell saw unprecedented demand for its AI servers, with a massive $14.4 billion backlog of orders. Investors will be looking for signs that this demand is translating into realized revenue and profitability.

Here is a breakdown of the key metrics and analyst consensus:

AI Server Backlog: This is perhaps the most important metric to watch. The last reported backlog was a staggering $14.4 billion. Investors will be looking for an update on this number and commentary from management on the pace of fulfilling these orders. A growing or well-maintained backlog would indicate sustained demand.

Profit Margins: While revenue growth is crucial, the profitability of the AI server business is equally important. AI servers are a high-demand but also a high-cost business. Commentary on gross and operating margins, especially within the ISG segment, will be a key indicator of Dell's ability to turn its AI momentum into profitable growth.

Client Solutions Group (CSG): While the spotlight is on AI servers, the traditional PC market (Dell's CSG segment) is still a major part of the business. Investors will be watching for signs of continued stabilization or growth in this segment, as it provides a stable cash flow stream.

Dell Technologies (DELL)

Based on 20 analysts from Tiger Brokers offering 12 month price targets for Dell Technologies in the last 3 months. The average price target is $143.07 with a high forecast of $180.00 and a low forecast of $104.00. The average price target represents a 7.98% change from the last price of $132.50.

Short-Term Trading Opportunities Post-Earnings

The stock's movement post-earnings will largely depend on whether Dell can exceed expectations and provide a strong outlook for the rest of the fiscal year.

Bullish Scenario (Upside): If Dell reports a significant beat on both revenue and EPS, particularly if it demonstrates strong profitability in its AI server business and provides an optimistic outlook for the rest of the year, the stock could see a strong positive reaction. This would likely cause the stock to trade higher as it reinforces the narrative of Dell as a leading AI play. Given that Dell's valuation is considered attractive compared to its peers, a strong report could trigger a re-rating of the stock. Traders might look for a long position on a positive surprise.

Bearish Scenario (Downside): The primary risk is a miss on earnings, a weaker-than-expected outlook, or disappointing news regarding the conversion of the AI server backlog into revenue. Given the high expectations and the stock's recent run-up (up about 12% year-to-date), any negative surprise could lead to a sharp sell-off. Traders might consider a short position or using put options if the report falls short of expectations.

Volatility: Earnings reports are inherently volatile events. The price could swing dramatically in either direction depending on the content of the report and the management's commentary during the conference call. Options trading strategies, such as straddles or strangles, are often employed by short-term traders to capitalize on this volatility without betting on a specific direction.

Technical Analysis - Exponential Moving Average (EMA)

The bulls have not regained control despite momentum remaining positive, and DELL share price is trading near the 12-EMA level, so investor sentiment and confidence on how Dell AI-driven server margins would matter.

Dell need to show that they are able to clear the backlog to convert into revenue fast enough, and also the profitability in AI, how their ISG business unit would be providing long-term sustainability of the AI growth story.

So for now, I think it might be better to hold on to getting in as Dell looks like will be hit by $NVIDIA(NVDA)$ earnings, as the AI server like PowerEdge XE server family designed for AI workloads, such as the XE9680L and upcoming XE7000, which can house multiple NVIDIA Blackwell Ultra GPUs for large model training.

Summary

Dell Technologies (DELL) is scheduled to report its fiscal Q2 2026 earnings on August 28, 2025. The company's performance will be primarily judged on its ability to capitalize on the booming AI server market.

Key metrics to watch include:

Revenue and EPS: Consensus estimates are for revenue of around $29.1 billion and adjusted EPS of $2.28.

AI Server Backlog: Following a massive $14.4 billion backlog reported in Q1, investors will scrutinize the pace of conversion to revenue and any updates on new orders. A strong reduction or sustained growth in the backlog is a key signal.

Profitability: Commentary on profit margins, especially within the high-demand but high-cost Infrastructure Solutions Group (ISG), will be critical for assessing the long-term sustainability of the AI growth story.

Short-term trading opportunities exist on both sides. A significant beat on earnings and a positive outlook on the AI server business could trigger a rally, given the stock's attractive valuation relative to peers. Conversely, any miss, or disappointing commentary on the backlog or margins, could lead to a sharp sell-off due to high market expectations. The stock's post-earnings volatility is a major factor to consider for short-term trading.

Appreciate if you could share your thoughts in the comment section whether you think DELL would be able to convert AI server backlog to revenue fast enough and also its profitability in AI will be watched closely.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.