Dell Technologies (NYSE: DELL) delivered record fiscal Q2 2027 results, with revenue rising 58% year over year to $47 billion and non-GAAP earnings per share reaching $7.04.
Infrastructure Solutions Group led the quarter, helped by AI server demand and continued spending on traditional servers and storage. Dell raised its full-year revenue outlook by $25 billion to $192 billion at the midpoint.
Much of the earnings discussion centered on the infrastructure required to support AI in production.
The company described agentic workloads driving demand for CPU compute and storage, while AI deployments are placing greater demands on data center engineering, power and cooling. Dell is also applying AI and automation to its own modernization efforts.
Why It Matters: Dell is tying AI adoption to an infrastructure cycle already underway across its enterprise customer base. Agentic workloads are adding another reason to update aging systems, bringing AI-related requirements into data center modernization decisions that extend outside dedicated AI servers
- AI Deployments Are Becoming More Demanding From an Engineering Standpoint: Dell booked $60.9 billion in AI orders during the quarter and finished Q2 with a $95 billion backlog. Its AI customer base has now passed 6,500, with enterprise adoption contributing to recent growth. Vice Chairman and COO Jeff Clarke said, “AI infrastructure requires much more than assembling and delivering components,” explaining that some customer engagements require upward of 50 designs to account for workload performance, power, cooling and the data center environment.
- Agentic AI Is Connecting AI Investment With the Traditional Server Business: Dell said most of its 122% growth in traditional server and networking revenue came from established enterprise customers upgrading aging infrastructure. AI is adding another source of demand as customers deploy CPU capacity to support agentic workloads. Clarke said Dell expects enterprise agentic AI to become the single largest workload by 2028, giving the company another avenue for server demand alongside dedicated AI systems.
- More AI Activity Is Feeding Into Dell’s Storage Business: Storage revenue grew 26%, with Dell reporting strength across products including PowerStore and its unstructured storage offerings. The company expects agents and KV cache to generate additional storage needs as AI applications create and retain more data. Dell is also testing Project Lightning, its parallel file system for native AI use cases, with several customers.
- The AI Buildout Is Arriving During an Extensive Data Center Refresh Cycle: Dell still has about 1.2 million assets running 14th-generation or older servers in its installed base, according to Clarke. New systems can consolidate that aging equipment while improving power efficiency and cooling. Security is adding urgency to replacement decisions, with Clarke citing resilience requirements and post-quantum cryptography when discussing why older infrastructure will need upgrades.
- Dell Is Using AI Inside Its Own Modernization Program: CFO David Kennedy said the company is “simplifying, standardizing, automating, and enhancing our operating model with AI,” work that Dell credits with helping improve efficiency and operating leverage. Those gains come while the company manages component shortages across several areas of its supply chain. Dell expects its full-year operating expense rate to reach approximately 8% of revenue, its lowest level in 42 years.
Go Deeper -> Dell Technologies’ Earnings Report – MarketBeat
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