Dell falls after soft Q3 guidance, margin squeeze in AI server business
Dell is down 6% premarket after issuing soft guidance for the third quarter.
The tech hardware company’s second-quarter earnings and revenue figures released after the bell on Thursday, however, did manage to best expectations:
Adjusted earnings per share of $2.32, higher than the $2.29 FactSet consensus estimate.
Revenue of $29.78 billion, compared with analyst estimates of $29.02 billion.
While the company raised its fiscal 2026 full-year revenue guidance to $107 billion at the midpoint and to $9.55 for non-GAAP diluted EPS — higher than analysts had expected — its third-quarter guidance was disappointing. The company anticipates non-GAAP diluted EPS of $2.45 in Q3, lower than the $2.55 consensus estimate on FactSet.
The company’s Infrastructure Solutions Group, which includes AI servers, had revenue of $16.8 billion last quarter, more than the $15.6 billion analysts predicted. The company says it expects to sell $20 billion worth of AI servers this year, double what it did last year.
Profitability in that business unit was on the weaker side, with margins coming in lower than anticipated. Dell COO Jeff Clarke attributed this to “aggressive” and “competitive” deals that caused some one-off expenses.
