Dell Technologies DELL reported first-quarter fiscal 2027 non-GAAP earnings of $4.86 per share and comfortably beat the Zacks Consensus Estimate by 59.9%. DELL reported earnings of $1.55 in the year-ago quarter.
Revenues jumped 88% from the year-ago quarter to $43.84 billion and topped the consensus mark by 23.62%.
Results reflected broad-based demand across the portfolio, with AI infrastructure remaining the standout. In the reported quarter, Dell Technologies booked $24.4 billion in AI orders, highlighting customers’ urgency to secure supply for large-scale deployments.
Dell’s ISG Rides AI Servers and Core Infrastructure Strength
Infrastructure Solutions Group (ISG) delivered the most powerful growth engine in the reported quarter, as customers expanded capacity for both AI and traditional workloads. ISG revenues surged 181% year over year to $29.01 billion, supported by momentum across all major categories.
Dell Technologies Inc. Price, Consensus and EPS Surprise
Dell Technologies Inc. price-consensus-eps-surprise-chart | Dell Technologies Inc. Quote
Within ISG, AI-optimized servers revenues surged to $16.13 billion, up 757% year over year, reflecting continued strength in accelerated computing demand. Traditional servers and networking revenues rose 92% to $8.54 billion, while storage revenues increased 8% to $4.33 billion, helped by steady execution across the Dell IP portfolio.
DELL’s CSG Shows Resilient Commercial and Consumer Demand
Client Solutions Group (CSG) also contributed to the broad-based nature of the quarter, with revenues rising 17% year over year to $14.61 billion. Commercial revenue grew 18% year over year to $13.02 billion, supported by large enterprise refresh activity and improved mix.
Consumer revenue increased 9% year over year to $1.59 billion, with demand aided by strength in gaming.
DELL Leans on Mix and Discipline to Expand Profitability
The reported quarter showed meaningful operating leverage as Dell Technologies scaled through a sharply higher revenue base. Non-GAAP gross margin rate was 18.1% (down from 21.6% reported in the year-ago quarter), with the company pointing to AI mix as a key driver of the year-over-year shift in margin rate.
At the same time, operating discipline remained evident in expense efficiency. Non-GAAP operating expenses were 8.4% of revenue (down from 14.5% reported in the year-ago quarter), supporting a non-GAAP operating income rate of 9.7% (expanded 260 bps year over year) and underscoring stronger scale in the model despite a challenging supply environment.
ISG operating income was $3.06 billion (up 206% year over year) with segment operating margin expanding 80 basis points (bps) to 10.5%. CSG operating income was $1.17 billion (up 79% year over year), translating to an 8% operating margin (up 280 bps), reflecting improved profitability versus the year-ago quarter.
Dell Delivers Strong Cash Generation and Shareholder Returns
Cash generation remained a key highlight of the quarter, reflecting both profitability and working-capital dynamics. Cash flow from operations was $4.08 billion, while adjusted free cash flow came in at $3.17 billion.
Dell ended the quarter with $14.1 billion in cash and investments and returned $2.1 billion to shareholders. Capital returns included repurchasing 11 million shares at an average price of $147 per share and paying a dividend of approximately $0.63 per share.
DELL Lifts Outlook as Customers Prioritize Securing Supply
Management’s outlook suggests demand remains durable, with customers continuing to prioritize infrastructure needs and proactively lock in supply. For the second quarter of fiscal 2027, Dell expects revenues between $44 billion and $45 billion, with non-GAAP earnings of $4.80 (plus or minus 10 cents).
For fiscal 2027, Dell Technologies expects revenues between $165 billion and $169 billion and guided to non-GAAP earnings of $17.90 per share (plus or minus 25 cents). The company also increased its FY27 AI-optimized server revenue expectation to roughly $60 billion, signaling confidence in continued AI infrastructure momentum through the year.
Zacks Rank & Other Stocks to Consider
Dell Technologies has a Zacks Rank #2 (Buy) at present.
Some other top-ranked stocks in the broader Zacks Computer and Technology sector are Ciena CIEN, Micron MU, and Credo Technology CRDO. Each of the three stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Credo Technology is set to report fourth-quarter fiscal 2026 results on June 1. Credo Technology shares have returned 54.5% in the YTD period.
Ciena is set to report second-quarter fiscal 2026 results on June 4. Ciena shares have surged 143.8% year to date.
Micron is slated to report third-quarter fiscal 2026 results on June 24. Micron shares have gained 224.9% in the YTD period.
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