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Investing.com -- Dell Technologies offered soft earnings guidance for the current quarter, overshadowing second-quarter results and full-year guidance that topped estimates as surging enterprise spending on AI servers continued to boost performance.
Dell Technologies Inc (NYSE:DELL) was down around 6% in premarket trading Friday as of 04:33 ET (08:33 GMT).
The company reported second-quarter adjusted EPS of $2.32 on revenue of $29.78 billion, compared with estimates for $2.31 per share and $29.02B, respectively.
The client solutions group rose 1% to $12.5B year-on-year in Q2.
Operating margin reached 7.7%, supported by a roughly 120 bps sequential increase in CSG margins to 6.4%, while ISG margins fell 90 bps to 8.8%.
For Q3, the company guided adjusted EPS of $2.45, missing estimates of $2.55, while revenue guidance of $26.50B to $27.50B beat estimates of $26.31B.
Looking further ahead to 2026, Dell said it now expects adjusted EPS of $9.55 on revenue of $105B to $109B, or $107B at the midpoint, up from a prior estimate of $9.40 and revenue of $103B at the midpoint. That topped estimates for EPS of $9.38 on revenue of $104.84 billion.
The company also said it now expects AI server sales for the full-year of $20B, up from a prior estimate of $15B.
Evercore analysts pointed to several drivers behind expected revenue and margin improvement in the second half (H2), including the “expansion of AI compute margins, ISG uptick from storage seasonality and improvement in Americas (x86 servers), and share gains on CSG.”
The team noted that investors are likely to focus on Dell’s ability to lift margins by roughly 250 basis points in H2 versus H1, though they believe this is “more driven by seasonal assumptions + lack of 1x ramp-up costs in H2.”
Separately, Mizuho Securities analysts highlighted the "AI server strength" in the quarter, adding that they "continue to see secular growth in AI server shipments as LLM efficiency improves."
(Yasin Ebrahim contributed to this report.)