Skip to content
    DELL
    Earnings call· Jan 2026(Q4 FY26)

    Dell Technologies Q4 FY26 earnings call DELL

    Feb 26, 2026 Source

    Executive summary

    Dell Technologies Q4 FY26 — Record AI Orders and Strong Financial Performance

    Dell Technologies closed FY26 with record revenue and EPS, driven by exceptional demand for its AI solutions, which saw record orders and a growing backlog. The company demonstrated strong operational execution, navigating a dynamic component cost environment with agile pricing strategies, particularly in ISG. While strategically leaning into market share in CSG, Dell is positioned for continued growth and profitability in FY27, leveraging its scale and supply chain advantages.

    Highlights

    5

    • Record Q4 revenue of $33.4 billion, up 39% year-over-year.

    • Record Q4 diluted EPS of $3.89, up 45% year-over-year.

    • Record Q4 AI orders of $34.1 billion, with AI backlog reaching $43 billion.

    • ISG revenue grew 73% to a record $19.6 billion, marking 8 consecutive quarters of double-digit growth.

    • CSG revenue grew 14%, gaining 100 basis points of market share in a market that grew 10%.

    Concerns

    3

    • CSG profitability reflected strategic share capture in a highly competitive market, with operating income at $0.6 billion or 4.7% of revenue.

    • Higher-than-normal industry channel inventory levels delayed price increases in CSG, impacting margins.

    • Component supply tightness and frequent pricing resets, particularly for memory, are creating a dynamic and challenging environment.

    Guidance & targets

    21
    CategoryTargetConfidence
    Full-year FY27 revenue
    $138 billion to $142 billion
    high materiality
    High
    Full-year FY27 AI revenue
    $50 billion
    high materiality
    High
    Full-year FY27 ISG revenue growth
    mid-40s
    medium materiality
    High
    Full-year FY27 Traditional Servers and Storage revenue growth
    mid-single digits
    medium materiality
    Medium
    Full-year FY27 CSG revenue growth
    roughly 1%
    medium materiality
    Medium
    Full-year FY27 operating expense growth
    low single digits
    medium materiality
    High
    Full-year FY27 operating income growth
    approximately 18%
    high materiality
    High
    Full-year FY27 diluted non-GAAP earnings per share
    $12.90, plus or minus $0.25
    high materiality
    High
    Q1 FY27 revenue
    $34.7 billion to $35.7 billion
    high materiality
    High
    Q1 FY27 ISG revenue growth
    over 100%
    medium materiality
    High
    Q1 FY27 AI server revenue
    $13 billion
    high materiality
    High
    Q1 FY27 CSG revenue growth
    roughly 2%
    medium materiality
    Medium
    Q1 FY27 operating expenses
    down low single digits
    medium materiality
    High
    Q1 FY27 operating income growth
    up roughly 60%
    high materiality
    High
    Q1 FY27 diluted share count
    roughly 664 million shares
    medium materiality
    High
    Q1 FY27 diluted non-GAAP earnings per share
    $2.90, plus or minus $0.10
    high materiality
    High
    Annual dividend per share
    $2.52 per share
    high materiality
    High
    Share repurchase authorization
    $10 billion increase
    high materiality
    High
    AI server operating margin
    mid-single-digit
    high materiality
    High
    ISG and CSG operating income rates
    lower end of our long-term framework
    medium materiality
    Medium
    I&O (Interest & Other)
    $1.4 billion and $1.5 billion
    low materiality
    High

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    Infrastructure Solutions Group (ISG)
    Record revenue and operating income, marking 8 consecutive quarters of double-digit revenue growth and 7 consecutive quarters of double-digit operating income growth. Driven by higher revenue, scaling, and strong storage profitability due to higher mix of Dell IP.
    Operating Margin: 14.8%Sequential Operating Margin Improvement: 240 bps
    		$19.6 billion73%—$2.9 billion
    AI Server
    Exceptional demand with record orders and broad-based demand across neoclouds, sovereigns, and enterprise customers. Profitability in line with mid-single-digit operating margin target.
    Orders: $34.1 billionShipments: $9.5 billionEnding Backlog: $43 billionCustomer Base: over 4,000
    		$9 billion4x—mid-single-digit operating margin
    Traditional Server and Networking
    Demand improved throughout the quarter, outpacing revenue. Broad-based strength with units up, larger active buyer base, and richer mix of 16th and 17th generation platforms.
    		$5.9 billion27%—stable profitability
    Storage
    Continued outperformance from Dell IP portfolio with momentum across PowerMax, PowerStore, PowerScale, ObjectScale, and data protection. Higher Dell IP mix supported improved profitability.
    Dell IP Demand Growth: double-digitPowerStore Growth: 7th consecutive quarter of double-digit growthAll-Flash Arrays Growth: 3rd consecutive quarter of double-digit growth
    		$4.8 billion2%—improved profitability
    Client Solutions Group (CSG)
    Profitability reflects strategic share capture in a highly competitive market and higher-than-normal industry channel inventory levels which delayed price increases. Gained share in Q4.
    Operating Margin: 4.7%
    		$13.5 billion14%—$0.6 billion
    Commercial (CSG)
    Sixth consecutive quarter of growth, with demand up for the eighth quarter. Growth across geographies, strong large enterprise demand, and traction in the lower end of commercial.
    		$11.6 billion16%——
    Consumer (CSG)
    Demand up for the second consecutive quarter, supported by strength in gaming.
    		$1.9 billionroughly flat——

    Operational metrics

    32
    Revenue
    $113.5 billionup 19%
    FY26

    Record full year revenue.

    Diluted EPS
    $10.30grew 27%
    FY26

    Record full year EPS.

    Capital returned to shareholders
    $7.5 billion
    FY26

    Includes share repurchases and dividends.

    Shares repurchased
    54 million sharesmore than doubled last year
    FY26

    Part of capital returns.

    Gross margin dollars
    $6.8 billionincreased 18%
    Q4 FY26
    Gross margin rate
    20.5%
    Q4 FY26

    Slightly better than anticipated.

    Operating expenses
    $3.3 billionup 5%
    Q4 FY26
    Operating expenses as % of revenue
    9.9%down 320 bps
    Q4 FY26

    Reflects meaningful scale within the P&L.

    Operating income
    $3.5 billiongrew 32%
    Q4 FY26

    Primarily driven by higher revenue.

    Operating income as % of revenue
    10.6%
    Q4 FY26
    Net income
    $2.6 billionup 36%
    Q4 FY26

    Primarily driven by stronger operating income.

    Cash and investments balance
    $13.3 billionup $1.9 billion sequentially
    Q4 FY26

    As of quarter end.

    Core leverage ratio
    1.4x
    Q4 FY26

    In line with target.

    Capital returned to shareholders
    $2.2 billion
    Q4 FY26

    Includes share repurchases and dividends.

    Shares repurchased
    14.9 million shares
    Q4 FY26

    Part of capital returns.

    Dividend paid
    approximately $0.53 per share
    Q4 FY26

    Part of capital returns.

    AI orders
    $64.1 billion
    FY26

    Full year AI orders.

    AI shipments
    $25.2 billion
    FY26

    Full year AI shipments.

    AI shipments
    $10 billion
    FY25

    Reference for FY26 growth.

    AI revenue growth
    150%year-over-year
    FY26

    Growth from $10 billion in FY25 to $25 billion in FY26.

    AI customer base
    over 4,000
    Q4 FY26

    Growth across neoclouds, sovereigns, and enterprise customers.

    Traditional server consolidation ratio
    7:1
    Q4 FY26

    ROI to refresh is compelling, improving performance and lowering cost of ownership.

    Traditional server consolidation ratio
    6:1
    Q4 FY26

    ROI to refresh is compelling, improving performance and lowering cost of ownership.

    Dell IP storage data rate reduction
    5:1
    Q4 FY26

    Leading data rate reduction, increasing customers' effective storage capacity.

    Data protection compression and deduplication
    up to 75:1
    Q4 FY26

    Helps customers through memory crisis shortage with advanced architectures.

    CSG market share gain
    100 bps
    Q4 FY26

    In a market that grew 10%, Dell's business grew 18%.

    DRAM spot market price increase
    nearly 5.5x
    last 6 months

    Reflects component cost environment.

    NAND spot market price increase
    nearly 4x
    last 6 months

    Reflects component cost environment.

    Memory price increase estimate
    20% to 50%up over Q1
    Q2 FY27

    Forward estimates for component costs.

    Memory price increase estimate
    5% to 15%
    Q3 FY27

    Forward estimates for component costs.

    Memory price increase estimate
    5% to 10%
    Q4 FY27

    Forward estimates for component costs.

    Cash conversion cycle
    minus 32 daysflat quarter-on-quarter, improvement of a day year-on-year
    Q4 FY26

    Reflects diligence in working capital management despite AI business expansion.

    Industry KPIs

    11
    MetricValueDetails
    Capital return FCF$7.5 billion (FY26), $2.2 billion (Q4 FY26)USD
    Unit shipments ASP—
    Gross margin drivers20.5%%
    Market share commentary100 bpsbps
    Services peripheral attach—
    Long term supply agreements—
    Component supply constraints—
    Installed base refresh runway—
    Capacity roadmap qualification—
    Ai server orders revenue backlog$34.1 billion (orders), $9 billion (revenue), $43 billion (backlog)USD
    Revenue mix by end market segment—

    Orderbook & backlog

    3
    AI Backlog$43 billionend of Q4 FY26

    Record backlog, predominantly Grace Blackwell. No Vera Rubin in current backlog. Pipeline continued to grow sequentially even after converting $34.1 billion of orders.

    AI Orders$34.1 billionQ4 FY26

    Record orders, evidence that demand is accelerating as customers deploy AI at scale.

    AI Orders$64.1 billionFY26

    Full year AI orders.

    Product announcements

    2
    ProductTypeDetails
    Lightningmilestone
    Vera Rubinroadmap

    Risks & headwinds

    3
    Unprecedented AI demand creating sustained supply tightness and frequent pricing resets for components.Ongoing, particularly impacting Q2-Q4 FY27.

    DRAM spot market up nearly 5.5x, NAND up nearly 4x over last 6 months. Q2 estimates up 20-50%.

    Mitigation: Shorter quote validity periods, more dynamic pricing, tighter alignment between supply chain, sales, and pricers. Implemented pricing moves (servers Dec 10, CSG Jan 6). Leveraging scale, direct model, and long-standing supplier relationships.

    Higher mix of competitive large bids and customer expansion, along with higher-than-normal industry channel inventory levels, delayed price increases in CSG, impacting profitability.Q4 FY26, with improvements expected in Q1 FY27 and continuing through the year.

    CSG operating income was $0.6 billion or 4.7% of revenue in Q4 FY26.

    Mitigation: Implemented pricing moves effective January 6 to reflect higher input costs. Expects orders margins to improve and operate CSG within long-term value creation profitability framework.

    Customers assessing needs and priorities in an environment where component demand outpaces supply, elevating input costs and extending lead times, leading to uncertainty in second half demand.Second half of FY27.

    Guidance incorporates a prudent view of second half demand.

    Mitigation: Pricing to offset pressures. Acknowledging potential for elongated replacement cycles if IT budgets are drained by pull-forward behavior.

    Q&A highlights

    7

    Inquired about the sustainability of mid-single-digit operating margins for AI servers despite scaling, and potential pull-through of other business as the customer base diversifies.

    Management confirmed the mid-single-digit operating margin target for AI servers is sustainable, citing the $43 billion backlog and future demand. They highlighted the growth in the 5-quarter pipeline across all customer types, especially enterprise, and the increasing intensity of compute required for inference workloads as positive drivers.

    “We operated throughout the quarter and over the course of the year in that mid-single-digit operating income. With what we see in front of us, there's no reason to change that. That is our guidance of where we can operate this business, and we're going to continue to grow it.”

    asked by Tim Long · answered by Jeffrey Clarke

    2 min read6 chapters

    Detailed Narrative

    01

    AI Momentum and Broadening Demand

    Dell Technologies experienced an exceptional quarter for AI, booking $34.1 billion in AI orders in Q4 FY26, demonstrating accelerating demand for AI solutions. The company shipped $9.5 billion in AI servers during the quarter and exited with a record $43 billion in AI backlog. The customer base for AI solutions surpassed 4,000, with growth observed across neoclouds, sovereign entities, and enterprise customers, indicating a broadening adoption of AI across various segments.

    02

    Traditional Server Strength and Modernization

    Demand for traditional servers significantly outpaced supply in Q4 FY26, with strong double-digit growth across all regions. This momentum was driven by customers prioritizing compute for critical workloads and a shift towards dense, high-performance configurations (16th and 17th generation platforms). The company highlighted a compelling ROI for refresh cycles, with a 7:1 consolidation ratio when upgrading from 14th generation to latest platforms, indicating a substantial opportunity given the majority of the installed base remains on older servers.

    03

    Storage Outperformance and Dell IP Growth

    Dell's storage revenue grew 2% in Q4 FY26, with continued outperformance from its Dell IP portfolio, which saw double-digit demand growth across PowerMax, PowerStore, PowerScale, ObjectScale, and data protection solutions. All-flash arrays achieved their third consecutive quarter of double-digit growth, and PowerStore recorded its seventh consecutive quarter of double-digit growth. Profitability improved due to a higher mix of Dell IP, and the company expects its architecture, offering high data reduction and compression, to continue driving growth.

    04

    CSG Share Gains and Margin Dynamics

    CSG revenue grew 14% in Q4 FY26, leading to market share gains as the company leaned into growth, expanding its buyer base across commercial, emerging markets, consumer, and education segments. However, this strategy, coupled with higher-than-normal industry channel inventory levels, led to a delay in price increases and impacted profitability. Dell implemented pricing adjustments effective January 6 to address higher input costs and expects CSG margins to stabilize within its long-term profitability framework.

    05

    Supply Chain Agility and Pricing Discipline

    The industry environment remains highly dynamic due to unprecedented🌐 AI demand, leading to sustained supply tightness and frequent pricing resets for components. Dell responded by implementing shorter quote validity periods, more dynamic pricing, and tighter alignment between its supply chain, sales, and pricing teams. The company's scale, direct model, and long-standing supplier relationships are cited as key advantages in managing this environment, allowing for rapid adjustments to protect margins.

    06

    FY26 Record Performance and Capital Returns

    FY26 was a defining year for Dell, with record full-year revenue of $113.5 billion (up 19%) and EPS of $10.30 (up 27%). The company generated over $11 billion in annual cash flow and returned $7.5 billion to shareholders, including repurchasing 54 million shares. For FY27, Dell is raising its annual dividend by 20% to $2.52 per share and approved a $10 billion increase in its share repurchase authorization, reflecting confidence in future cash generation.

    AI-generated summary of the company’s earnings call. Not investment advice.