Dell Technology (DELL) Q2 earnings outlook: AI momentum continues

Key Points

Contents

Key Points

Expected Financial Performance

Shareholder Structure and Wall Street Sentiment

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The second quarter of fiscal year 2027 financial report will be released on September 1

Driven by the development momentum of artificial intelligence infrastructure, Dell Technology shares have soared 272% so far this year.

The company expects second-quarter revenue to be between US$44 billion and US$45 billion, with an annual growth rate of approximately 50%.

Earnings per share for the second quarter are expected to be approximately US$4.80, a year-on-year increase of more than 100%.

Analysts maintain a "moderate buy" rating with an average price target of US$519.36 and expect a potential increase of approximately 11%.

Dell Technologies (DELL) will announce its second-quarter fiscal 2027 results on September 1. Driven by strong demand for artificial intelligence servers and advanced data center equipment, the company's share price has soared 272% since the beginning of the year.

Dell Technologies, ticker symbol DELL

Management has given second-quarter revenue guidance in the range of US$44 billion to US$45 billion, with a median of approximately 50% year-on-year growth. Not long ago, such staggering numbers seemed unrealistic.

The Infrastructure Solutions Group (ISG) division is again expected to assume the majority of the performance contribution. Demand for AI-optimized servers comes from multiple channels, including corporate customers, new cloud infrastructure providers, and sovereign entities, creating more diversified revenue sources than a single market segment.

In the first quarter, Dell received $24.4 billion in artificial intelligence-related orders and achieved $16.1 billion in artificial intelligence server sales. The quarter ended with an unprecedented backlog of artificial intelligence orders of $51.3 billion, and the company's sales pipeline was several times larger.

Looking forward to the second quarter, Dell expects artificial intelligence server sales to be approximately US$15.5 billion, which will generate approximately 75% growth for the ISG division. Continued customer demand still exceeds existing supply capabilities, indicating that the backlog of orders will expand further.

Expected financial performance

Dell internally forecasts second-quarter earnings per share of approximately $4.80, a year-on-year increase of more than 100%. Wall Street analysts showed greater confidence, predicting earnings per share growth of more than 120%.

In the past four reporting periods, Dell has exceeded analysts 'earnings per share expectations, with a staggering 66% over expectations in the last quarter. This continued performance that exceeded expectations builds credibility for assessing upcoming performance results.

Traditional server sales remain strong as large enterprise customers modernize their computing infrastructure and expand operational capabilities. In addition, artificial intelligence reasoning workloads are bringing additional demand to traditional server platforms, further expanding the addressable market.

Storage is another important part of ISG's performance. This business segment makes a significant contribution to overall profitability, which goes beyond mere revenue creation.

Shareholder Structure and Wall Street Sentiment

In terms of shareholder structure, listed companies and retail investors together hold 39.52% of Dell's shares. Exchange-traded funds hold 20.45%, mutual funds hold 15.46%, company insiders hold 12.76%, and other institutional investors account for 11.81%.

The 12.76% insider shareholding ratio is quite significant. Founder Michael S. Dell personally holds a 5.40% stake. Pioneer Group is the main institutional shareholder, with a shareholding ratio of 7.94%.

Analysts currently agree to give Dell shares a "moderate buy" rating, including 12 buy ratings and 5 hold ratings. The average target price is US$519.36, indicating about 11% upside from current trading levels.

The most bullish analyst price target reaches $700, which means an increase of about 51% from current prices.

Dell currently trades at a forward P/E ratio of 24. Analysts forecast a 96.3% increase in earnings per share in fiscal 2027 and expect continued double-digit growth in fiscal 2028.

The Barchart consensus price target is US$509.86, indicating an approximately 10% chance of upside compared to current market valuations.