Mirror Review
May 30th, 2025
Dell Technologies recently shared its Dell Q1 2026 Results, and AI is clearly driving the momentum.
While earnings per share came in slightly below some Wall Street expectations, Dell beat revenue forecasts and issued a strong growth outlook for the rest of the year.
The key reason? What the company calls “unprecedented demand” for its AI-optimized servers.
Key Insights from Dell’s Fiscal 2026 Q1 Performance
1. Q1 Financial Highlights & Overall Growth:
Dell started its fiscal year with some seriously impressive numbers. Their revenue soared to an amazing $23.4 billion, marking a healthy 5% increase compared to last year.
As Dell’s CFO, Yvonne McGill, happily pointed out, this growth wasn’t just in one area. “All of our core businesses grew as we reached $23.4 billion in revenue in our first quarter,” she stated, adding that their non-GAAP earnings per share grew three times faster than revenue!
Key figures include:
- Operating Income: A solid $1.2 billion (up 21% year-over-year), with non-GAAP operating income reaching $1.7 billion (up 10% year-over-year).
- Cash Flow: A record-breaking $2.8 billion generated from their operations.
- Shareholder Returns: A generous $2.4 billion given back to shareholders – more than double their quarterly average since fiscal year 2023!
2. AI Server Demand Surges
The demand for Dell’s AI-optimized servers is exceptionally strong.
Jeff Clarke, Dell’s Chief Operating Officer, perfectly summed up the situation, stating: “We achieved first-quarter record servers and networking revenue of $6.3 billion, and we’re experiencing unprecedented demand for our AI-optimized servers”.
- AI Orders & Backlog:
In Q1 alone, Dell raked in an astounding $12.1 billion in AI orders – that’s more than all their AI shipments in the entire fiscal year 2025!
Moreover, they’re sitting on a massive $14.4 billion backlog for AI products!
- Reasons for AI Success:
Dell attributes this to several factors:
- Lightning-Fast Innovation: They’re designing custom solutions for customers at “breakneck speed”, always ready to adapt to the newest tech architectures.
- Unbeatable Partnerships: Dell boasts an “unmatched” network of top-tier partners, including NVIDIA, AMD, and Google.
- A Competitive Edge: They have a solid reputation for quickly and reliably deploying large-scale AI systems, which sets them apart from the competition.
- Total Support: Dell offers comprehensive ongoing support, including managed services, and flexible ways to finance purchases.
3. Infrastructure Solutions Group (ISG) Growth:
Dell’s Infrastructure Solutions Group (ISG) saw a fantastic 12% increase in revenue year-over-year, hitting $10.3 billion.
- Servers and Networking:
This segment hit a record $6.3 billion (up 16% year-over-year). Even traditional server revenue saw double-digit growth, marking six straight quarters of increasing demand!
This is partly because businesses are upgrading and consolidating their data centers, creating a huge opportunity for Dell’s latest 16G and 17G servers.
- Storage:
Revenue reached $4.0 billion (up 6% year-over-year), celebrating its third consecutive quarter of profit and margin improvement.
This is because Dell is focusing on their own innovative technology in midrange, software-defined, unstructured, and data protection solutions.
Demand for their PowerStore solutions has been on the rise for five quarters straight, thanks to its data reduction guarantee and smart AI analytics for security.
Furthermore, Data Protection demand also saw double-digit growth.
4. Client Solutions Group (CSG) Performance:
CSG revenue rose 5% to $12.5 billion.
- Commercial Client:
This was a star performer, bringing in $11.0 billion in revenue (up 9% year-over-year).
This marks three consecutive quarters of profit growth and five quarters of increasing demand in the commercial sector, with strong double-digit demand across businesses of all sizes.
Dell is seeing encouraging signs that companies are upgrading to new Windows 11 PCs, including AI-powered ones, even if the overall PC upgrade cycle isn’t as fast as before.
- Consumer Client:
The consumer market remains challenged, with revenue declining 19% to $1.5 billion due to a competitive pricing environment.
5. Dell’s Growth Forecast for FY26:
- Next Quarter (Q2 FY26):
They expect revenue to be between $28.5 billion and $29.5 billion (a huge 16% increase year-over-year at the midpoint), with non-GAAP diluted earnings per share around $2.25 (up 15% year-over-year).
- Full-Year (FY26):
For the entire fiscal year, Dell’s revenue guidance is a robust $101.0 billion to $105.0 billion (an 8% increase year-over-year at the midpoint). They’ve even raised their non-GAAP diluted earnings per share forecast to $9.40 at the midpoint (up 15% year-over-year)!
The company anticipates its ISG business to grow by a high-teens percentage, fueled by over $15 billion in AI server shipments. Their CSG business is expected to see low-to-mid single-digit growth.
6. Dell’s New Innovations:
Dell emphasized significant advancements in its Dell AI Factory, from AI PCs to data center solutions. Examples include:
- Leading the industry with the widest range of Copilot+ capable AI PCs.
- Brand-new Dell Pro Max notebooks and desktops packed with powerful GPUs and processors.
- Advanced server platforms like the XE9780 (air-cooled) and 9780L (liquid-cooled), plus the XE9712 which supports NVIDIA’s mighty GB300 NVL72.
- The innovative PowerCool platform, designed to boost cooling efficiency.
- The Dell AI Data Platform, featuring groundbreaking technologies like Project Lightning, co-engineered with NVIDIA.
- Expanded partnerships, like bringing Google Gemini on-premise exclusively for Dell customers.
Conclusion
The Dell Q1 2026 results tell a clear story: AI is reshaping Dell’s business, and the company is moving fast to lead the charge.
With strong AI orders, growth in its core ISG and Commercial CSG segments, and a commitment to innovation, Dell is well-positioned for continued growth.
The company is radiating confidence in its strategy and its ability to deliver value. Now, all eyes are on how effectively Dell can turn this incredible momentum into long-term market leadership!
