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Dell enters tonight’s Q2 earnings report with one of the biggest AI infrastructure backlogs in the market. AI server backlog reached $51.3 billion in Q1, putting the focus squarely on how quickly the company can convert enormous demand into shipments and earnings.
Margins are the other major piece of the story. Gross margin fell to 17.8% last quarter as AI servers became a larger part of the mix, though management has pointed toward improving rates in the second half.
Investors have already priced in plenty of good news. Dell shares are up 240% year to date, while management has raised its AI server target to $60 billion and its revenue midpoint to $167 billion.
Another strong quarter could reinforce Dell’s position as one of the clearest enterprise AI infrastructure plays. But after such a massive rally, supply constraints or continued AI-related margin pressure could be enough to send shares lower.
This article is updated throughout the trading day. Check back for more.
Dell Technologies (NYSE:DELL | DELL Price Prediction) is expected to report fiscal Q2 2027 earnings at 4:05 PM ET. The stock has been repriced entirely around AI infrastructure, and this report tests whether the raised full-year targets still hold together. The stock is down 5.86% intraday to $429.15 ahead of tonight’s Q2 earnings.
Q1 FY27 delivered $43.84 billion in revenue, up 87.54% YoY, exceeding estimates by 22.58%. Non-GAAP EPS of $4.86 beat consensus by 63.99%, and AI-optimized server revenue reached $16.132 billion, up 757% YoY.
Dell booked $24.4 billion in AI orders and lifted the FY27 AI server target to roughly $60 billion, alongside a revenue midpoint of $167 billion. Gross margin compressed to 17.8% from 21.1%. CFO David Kennedy said, “Excluding the impact of AI mix, our gross margin outlook is better than it was 90 days ago.“ Shares now sit at $431.86.
| Metric | Q2 FY27 Estimate | YoY Change | FY27 Estimate | FY28 Estimate |
|---|---|---|---|---|
| Revenue | $44.44B | +49% | $172.41B | $195.30B |
| EPS (Non-GAAP) | $4.8994 | +113% | $18.6811 | $20.1563 |
Q2 EPS consensus has climbed from $3.0091 ninety days ago, with 2 upward revisions in the last 30 days. FY27 EPS consensus of $18.6811 sits above Dell’s own $17.90 midpoint, signaling the Street expects another guidance raise tonight.
Tonight, I’ll be watching the AI order number first. COO Jeff Clarke told investors, “We have a supply issue. We are supply constrained in the second half. It is not a demand issue for us.” Any deceleration in bookings, or another sequential backlog build beyond $51.3 billion, resets the FY27 setup.
Investors will also focus on gross margin. AI server profitability was pegged at a mid-single-digit operating income rate, and ex-AI, management guided the rate higher through the year. I’ll be looking for confirmation that the second-half expansion is on track.
CSG margin was guided to roughly 6% for Q2 versus 8.0% in Q1. Commercial Client revenue reached a record $13.020 billion, so I’ll watch whether Dell is trading market share for profitability.
Finally, second-half of the year framing matters. CFO David Kennedy said, “We have increased our expectations for the second half while maintaining an appropriate level of prudence.” How management updates that language will move the stock.
| Quarter | EPS Surprise | Day-of Move | 1-Day Move | 1-Week Move |
|---|---|---|---|---|
| Q1 FY27 | +63.99% | +32.76% | +10.7% | -6.3% |
| Q4 FY26 | +10.74% | +21.93% | +3.69% | -1.08% |
| Q3 FY26 | +4.46% | +5.83% | +0.07% | +4.3% |
| Q2 FY26 | +1.13% | -8.88% | -0.97% | +0.7% |
On average, shares moved -0.03% one week after earnings across the last five reports.
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Thomas Richmond is a financial writer and content strategist with 5+ years of experience covering stocks and financial markets. He has published over 250 articles focused on individual stock analysis, helping investors better understand business fundamentals, stock valuations, and long-term opportunities.
Thomas previously served as a Content Lead at TIKR, a stock research platform, where he helped scale the company’s blog to hundreds of articles per month and contributed to a weekly newsletter reaching more than 100,000 investors.
He specializes in breaking down complex companies into clear, actionable insights for everyday investors, with a focus on fundamentals-driven research.
His work has also been featured on platforms including Seeking Alpha and Sure Dividend.
Outside of work, Thomas enjoys weight lifting and soccer.
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