Record AI Server Shipments Drive Upgraded Revenue Forecasts
Dell Technologies has significantly raised its growth outlook for the coming years, citing unprecedented demand for its artificial intelligence (AI) server solutions. In the first half of fiscal year 2026 alone, Dell shipped $10 billion worth of AI servers—surpassing its entire total for FY2025 and prompting the company to lift its AI server shipment guidance to $20 billion for the year[1]. The surge reflects sustained enterprise and hyperscaler investments in data infrastructure optimized for AI workloads.
Key Financial Highlights
- AI server shipments: $10 billion in H1 FY2026; $20 billion target for FY2026[1]
- Infrastructure Solutions Group (ISG): Now delivers 56% of total revenue, with a 69% year-over-year jump in servers and networking to $12.9 billion[1]
- Full-year revenue forecast: $105–$109 billion, reflecting a 12% rise at the midpoint[1]
- AI server backlog: $14.4 billion, ensuring strong shipment pipeline[1]
- Non-GAAP EPS: Projected at $9.3–$9.8[1]
Margin Pressures and Road to Recovery
Despite robust revenue growth, Dell’s margins have come under short-term pressure from the high costs of producing advanced AI servers and a pricing cycle in key memory components. The company’s Q2 gross margin fell to 18.7% from 22% a year prior, with ISG operating margins dropping to 8.8% from 11% due to a higher AI mix and one-off supply chain expenses[1]. However, management anticipates a rebound, projecting ISG margins will recover to 12% by the end of FY2026 thanks to scale efficiencies, value engineering, and deeper enterprise penetration.
Strategic Partnerships and Industry Leadership
Strategic collaborations with companies such as
Nvidia and Hive Digital have played a pivotal role in strengthening Dell’s AI infrastructure offerings while improving cost optimization[1]. These alliances not only bolster product performance but also enhance Dell’s competitiveness in a rapidly evolving sector.
Analyst and Market Response
Analysts remain bullish on Dell’s trajectory, assigning an average price target that implies a 30% upside and citing its leadership in the AI hardware space. The company’s rare combination of near-term operational excellence and long-term vision positions it favorably against peers in the tech landscape[1]. Q3 guidance forecasts $26.5–$27.5 billion in revenue and 11% EPS growth, further reinforcing confidence in Dell’s momentum.
Conclusion
Dell’s aggressive push into the AI server market is redefining its growth prospects for 2026 and beyond. As the global appetite for AI computing infrastructure continues to accelerate, Dell’s strategic investments and robust order backlog set the company on course for industry leadership and sustained shareholder value[1].
