Dell Earnings Raise Outlook on AI Server Demand

Dell Technologies said in a press release on Nov. 25 that its earnings signaled stronger growth as demand for servers supporting artificial intelligence prompted the company to raise its full-year outlook, reflecting accelerating data-center investment.

Third Quarter Results and AI Server Growth

Dell reported third-quarter fiscal 2026 revenue of $27.0 billion, an 11.0% increase year over year, with non-GAAP diluted earnings per share rising 39.0% to $2.59. The company raised its full-year revenue guidance to $111.2 billion–$112.2 billion from $105 billion–$109 billion and named David Kennedy as permanent chief financial officer. The press release said, “Our third quarter results reflect strong demand for our AI infrastructure solutions, and we are raising our full-year outlook.”

AI server sales in the quarter totaled $9.4 billion. Shipments in the first half of fiscal 2026 reached $10.0 billion, surpassing the entire total for fiscal 2025. The AI server backlog stands at $14.4 billion. Dell’s Infrastructure Solutions Group (ISG) posted third-quarter revenue of $16.8 billion, a 69.0% year-over-year gain. The company also raised its AI server shipment guidance for fiscal 2026 to $20.0 billion. These figures indicate a multiquarter demand cycle for AI-focused infrastructure and provide greater near-term revenue visibility.

Margins and Profitability Outlook

Gross margin in the quarter was 18.7%, down from 22.0% a year earlier, reflecting higher AI server costs and memory pricing. ISG operating margin declined to 8.8% from 11.0% in the prior year’s third quarter. Dell expects ISG operating margin to recover to 12.0% by the end of fiscal 2026, driven by scale efficiencies and a shift toward enterprise customers. The company’s ability to convert elevated AI volume into margin improvement will test whether scale and customer mix can offset near-term cost pressures as it expands its AI server business.