Dell Technologies Inc.: record revenue and profit in Q2 2026, but the market expected more

On September 1, 2026, Dell Technologies Inc. reported results for the second quarter of fiscal 2026. Revenue grew 57.7% to a record $46,971 million, and net profit rose 255.1% to $4,133 million. The stock, however, fell 6.8% on the release day, only to gain 17.1% by September 8. In our view, at the current price the shares look attractive given strong growth and margin expansion, despite a rich valuation.

Key takeaways

— Revenue rose 57.7% to a record $46,971 million, driven mainly by AI server sales

— Net profit more than tripled to $4,133 million, helped by operating margin expansion

— EBITDA margin widened from 8.5% to 13.1% on operating leverage

— Leverage remains moderate: net debt is 1.26 times EBITDA over the last twelve months

— The company raised its full-year guidance: revenue is expected at $192 billion, up 69% year over year

— The stock trades at a premium to its own history: EV/EBITDA is 22.4 versus the 3-year average of 9.1

— On the portal's model, the upside to fair value is +49% from the current price

Attractiveness

Key figures, USD bn

Revenue rose 57.7% to a record $46,971 million, driven mainly by AI server sales

In the second quarter of fiscal 2026, Dell Technologies Inc. reported revenue of $46,971 million, up 57.7% year over year. The main driver was the Infrastructure Solutions Group (ISG), whose revenue jumped 89% to $31,782 million. Within ISG, AI-optimized server sales doubled to $16,401 million, while traditional servers and networking grew 122%.

The Client Solutions Group (CSG) also showed solid growth: revenue rose 20% to $15,034 million, with commercial sales up 22% and consumer sales up 7%. Thus, growth was broad-based, but AI servers contributed the bulk of the increase.

Net profit more than tripled to $4,133 million, helped by operating margin expansion

Net profit for the reported quarter was $4,133 million, up 255.1% year over year. Operating income rose 204% to $5,385 million, and operating margin expanded from 6.0% to 11.5%. Net margin increased from 3.9% to 8.8%.

Profit growth was driven not only by higher revenue but also by operating leverage: selling, general, and administrative expenses rose only 15%, and R&D expenses 41%, both well below revenue growth. As a result, operating expenses as a percentage of revenue fell from 12.3% to 9.5%.

EBITDA margin widened from 8.5% to 13.1% on operating leverage

EBITDA for the reported quarter reached $6,139 million, up 142.2% year over year. EBITDA margin rose from 8.5% to 13.1%. This reflects economies of scale: with revenue up 58%, a significant portion of costs remained fixed.

Margin improvement is visible in both segments: ISG operating margin rose from 8.8% to 15.0%, and CSG from 6.4% to 7.6%. This confirms that profitability growth is systemic rather than a one-off effect.

Leverage remains moderate: net debt is 1.26 times EBITDA over the last twelve months

At the end of the reporting period, Dell Technologies Inc.'s net debt stood at $20,702 million. The ratio of net debt to EBITDA over the last twelve months is 1.26. This is a moderate level that does not constrain the company's ability to return capital to shareholders.

During the quarter, the company returned a record $4.3 billion to shareholders through share repurchases and dividends. The board declared a quarterly dividend of $0.63 per share, corresponding to a yield of about 0.43% over the last twelve months.

The company raised its full-year guidance: revenue is expected at $192 billion, up 69% year over year

Dell Technologies Inc. raised its revenue guidance for fiscal 2027 from $167 billion to $192 billion, implying growth of 69% year over year. The diluted EPS guidance was raised to $24.37 (GAAP) and $25.50 (non-GAAP).

The company also expects AI-optimized server revenue for the year to reach $74 billion, double its previous forecast. This points to sustained strong demand for AI infrastructure.

The stock trades at a premium to its own history: EV/EBITDA is 22.4 versus the 3-year average of 9.1

The current EV/EBITDA multiple is 22.4, well above the three-year average of 9.1. P/E over the last twelve months is 30.6. Market capitalization reached $347,968 million.

This valuation reflects investor expectations for further growth, especially in AI servers. However, it leaves little room for disappointment: any slowdown in growth could trigger a correction.

On the portal's model, the upside to fair value is +49% from the current price

Our fundamental value-creation model, based on EBITDA growth and a target multiple, values the shares 49% above the current price. This suggests that despite the rich market valuation, the model sees room for further upside.

The stock is held in our live model strategies on the portal: US GARP + acceleration, US Leaders (FVC quality), and US Tech / AI leaders. This reflects the company's fit with the selection criteria but is not an argument for the verdict.

Valuation on the latest reported figures

Bottom line

Dell Technologies Inc.'s Q2 2026 report was strong: revenue and profit grew at record rates, margins expanded, and the full-year guidance was raised. The company is successfully capitalizing on the AI infrastructure boom, as evidenced by order and backlog growth. However, the stock already trades at a premium to its own history, and the market, judging by the initial reaction, expected even more impressive results. Nevertheless, on our portal's model, the upside is +49%, making the shares attractive at the current price. The key question for holders is whether double-digit revenue growth and margins will persist in the coming quarters.