Dell slides after weak margins eclipse upbeat full-year forecast

Dell has raised its AI server shipment forecast to $20 billion due to strong demand, supporting a higher revenue outlook of $105-109 billion. However, profit margins are under pressure, with Q2's adjusted gross margin falling to 18.7% due to high production costs and competitive pricing. Despite holding 19.3% global server market share, Dell faces intensifying competition from HPE, IBM, and Lenovo. The company is prioritizing meeting demand over maintaining margins, resulting in lower-than-expected Q3 EPS guidance of $2.45. To address challenges, Dell is investing in cooling technology and strategic partnerships with NVIDIA and AI startups, while navigating risks in the rapidly growing but increasingly commoditized AI infrastructure market.

Alibaba's cloud computing revenue grew 26% to $4.67B, driven by AI investments exceeding 100B yuan. Despite this success, overall revenue missed analyst estimates at 247.65B yuan due to weaker e-commerce performance. The company is developing custom AI chips to counter restrictions on Nvidia hardware and has committed 380B yuan for cloud and AI infrastructure over three years. Alibaba's stock rose 8% post-earnings, showing investor confidence in its AI strategy.

Marvell Technology's stock dropped 12.48% following disappointing forecasts for its data center segment, despite record revenues. While data center sales reached $1.51 billion (74% of Q2 2026 revenue), the weaker outlook raised concerns about AI chip market sustainability. High R&D spending (30% of revenue) is pressuring margins, though Marvell recently expanded its partnership with AWS through a five-year agreement. Investors remain cautious about execution risks and elevated valuations despite some analysts' optimism about AI-driven growth prospects.

Dell Technologies reported record revenue of $29.8 billion in Q2 2026, up 19% year-over-year, driven by strong AI server demand in its Infrastructure Solutions Group. Despite raising full-year guidance and posting non-GAAP earnings of $2.32 per share (up 19%), Dell shares declined as investors focused on margin pressures caused by rising component costs and price competition. Management remains confident that long-term enterprise AI infrastructure demand will eventually offset these margin challenges.