AI Server Boom Powers Dell to Record Revenue—But PCs and Storage Lag Behind

Dell Technologies is riding a tidal wave of AI demand, delivering a landmark quarter with $29.8 billion in revenues—a 19% year-over-year leap. The real engine behind this surge: AI server orders. Dell shipped $8.2 billion in AI servers during Q2 and has now surpassed $10 billion in AI solution shipments for the first half of fiscal year 2026. The company raised its full-year AI server forecast to a hefty $20 billion.

This blockbuster growth was fuelled by Dell’s Infrastructure Solutions Group (ISG), which includes servers, networking, and AI infrastructure. ISG posted a staggering 44% revenue increase, with servers and networking alone vaulting 69% year-on-year. Meanwhile, storage sales drooped, and Dell’s traditional PC and monitor division—the Client Solutions Group (CSG)—barely budged, inching up just 1%. Consumer PC sales actually fell 7%.

Dell’s COO Jeff Clarke emphasized that this AI momentum is unlike anything the company has seen. “It’s the single largest number of customers that we sold to in a quarter… roughly 50% new and 50% returning,” Clarke said, pointing to healthy growth across sectors from finance to healthcare and higher education. Crucially, many of the AI projects are advancing from proof-of-concept to production—strong indicators of long-term demand.

On the financial front, adjusted earnings per share came in at $2.32—slightly above Wall Street’s target—and net profit climbed 32% year-on-year to $1.16 billion. Operational cash flow nearly doubled to $2.5 billion, signaling healthy liquidity.

But it wasn’t all sunshine. Dell’s stock slipped roughly 5–10% in after-hours trading. The market soured on forward guidance: Q3 profit estimates fell below analysts’ expectations, even as the full-year outlook was revised upward. Revenue projections now sit at $105–$109 billion, with EPS at $9.55—both revised higher to reflect AI demand.

Despite this hiccup, Dell’s AI strategy appears bulletproof. With a record backlog of AI orders, surging cash flow, and customers transitioning AI from pilot to practice, Dell is outpacing the broader market shifts—putting it at the vanguard of the AI infrastructure boom. The challenge now lies in reviving storage and rekindling PC growth to deliver a more balanced performance.