Dell Technologies Inc. (DELL), Financial Analysis

Insights derived from analysing SEC filings. Independent analysis, not a publication of the SEC.

Figures are read from the Forms 10-K for fiscal years 2023, 2024, 2025 and 2026, the Forms 10-Q for the first three quarters of fiscal 2026 and the first two of fiscal 2027, the 31 Forms 8-K filed between January 2025 and September 2026 together with their quarterly earnings exhibits 99.1, the definitive proxy statement of 15 May 2026 and the Item 5.07 voting results of 1 July 2026, on the record for central index key 1571996, together with the comparable annual reports of nine peers. Management commentary is quoted from the company hosted earnings calls of 26 February 2026, 28 May 2026 and 1 September 2026, which are not SEC filings. Fiscal 2024 figures are the revised figures published in the fiscal 2025 annual report. Accession numbers for every filing used appear in the Sources appendix. Market prices are the closing prices of 23 September 2026.

1. Summary

Dell Technologies carried a $95bn AI server backlog at 31 July 2026, 5.79 times the AI server revenue it recognised in that quarter. Net revenue rose 18.8% to $113.5bn in fiscal 2026 while the gross margin fell 220 basis points to 20.0%, the lowest of the five years covered here, and the annual report attributes that fall primarily to the shift in mix toward AI optimised servers. Operating margin rose to 7.2% from 6.5% over the same year, with operating expenses at 12.8% of revenue against 15.7%. In the first half of fiscal 2027 revenue reached $90.8bn, 47.3% of the $192bn full year guidance, at a gross margin of 19.4% and an operating margin of 10.0%. The share closed at $549.83, 63.3 times fiscal 2026 earnings and 22.4 times the base case fiscal 2027 earnings set out in section 14.

2. Revenue and the business model

Dell sells servers, networking equipment, storage, personal computers and peripherals in more than 170 countries, and finances a part of those sales through Dell Financial Services. The annual report puts headcount at about 97,000 at 30 January 2026 and states that other sales channels, meaning resellers, system integrators, distributors and retailers, generated approximately 40% of net revenue in fiscal 2026, with the balance sold directly. Dell Financial Services funded $11.9bn of originations during the year and held a $14.3bn portfolio of financing receivables at the year end. Sales outside the United States were approximately 45% of consolidated net revenue.

The business reports in two segments. Infrastructure Solutions Group revenue grew 39.5% to $60.8bn in fiscal 2026 and passed Client Solutions Group revenue for the first time in the period covered here. Client Solutions Group revenue grew 5.4% to $51.0bn. Segment operating margins moved in opposite directions over the five years: Infrastructure ran at 11.7% in fiscal 2026 against 10.9% in fiscal 2022, while Client fell to 5.6% from 7.1%. The annual report attributes the 110 basis point fall in the Infrastructure margin in fiscal 2026 to a gross margin rate that fell faster than the operating expense rate, driven by the shift toward AI optimised servers.

Customer concentration appeared for the first time in fiscal 2026. The concentrations note states that one customer accounted for 12% of consolidated net revenue for the year, with substantially all of that attributable to Infrastructure Solutions Group offerings, and that no single customer reached 10% in fiscal 2025 or fiscal 2024. On the supply side, non trade receivables from the three largest contract manufacturers were $13.2bn at the year end against $5.4bn a year earlier, of which $13.0bn was offset against corresponding payables.

3. The AI server transition

AI optimised server revenue went from $1.9bn in fiscal 2024, 2.1% of consolidated net revenue, to $24.7bn in fiscal 2026, 21.7% of it. Guidance for fiscal 2027 is $74bn, which would be 38.5% of the $192bn revenue midpoint. Over the same period the consolidated gross margin fell from 23.8% to 20.0%, and in Q1 FY2027 to 17.8%. The annual report gives one explanation for the fall, a shift in mix toward AI optimised servers. On each of the three most recent earnings calls the chief financial officer added that excluding that mix effect the gross margin rate rose year on year.

Orders exceeded revenue in each of the three quarters. Closing backlog was $18.4bn at the end of Q3 FY2026, $43bn at the end of Q4 FY2026 and $95bn at the end of Q2 FY2027. On the call of 1 September 2026 the chief operating officer put orders booked over the preceding twelve months at $131.7bn. The customer count Dell reports for its AI systems rose from 4,000 at the end of fiscal 2026 to 6,500 at the end of Q2 FY2027. Management states that the AI server business runs at a mid single digit operating income rate, against the 7.2% consolidated rate in fiscal 2026 and the 11.7% Infrastructure segment rate.

The backlog at the end of Q2 FY2027 was 5.79 times the AI server revenue recognised in that quarter and 3.85 times the AI server revenue recognised in the whole of fiscal 2026. The annual report states that the timing between demand and subsequent shipment is not linear, and gives the scale of the opportunities, the varying stages of customer readiness and the frequency of component part updates or transitions as the reasons. Section 8 gives the working capital position.

4. Financial analysis

Operating income of $8.1bn in fiscal 2026 was 30.7% above fiscal 2025, on revenue 18.8% higher and operating expenses 3.0% lower. Net income of $5.9bn gave earnings of $8.68 per diluted share against $6.38. Gross profit rose $1.5bn while the gross margin rate fell 220 basis points. Research and development was $3.1bn, 2.8% of revenue, against 3.2% a year earlier; selling, general and administrative expense fell 4.5% to $11.4bn, which the annual report attributes to lower employee compensation following a decline in headcount.

5. What changed in fiscal year 2026

Revenue rose $18.0bn, of which $15.4bn, or 85.7%, came from AI optimised servers. Gross margin rose $1.5bn on that revenue, an incremental gross margin of 8.1%, against the 22.2% average rate carried into the year. Operating expenses fell $455m over the same period. Gross profit alone would have given operating income growth of 23.4%; the reduction in operating expenses accounts for the remaining 7.3 points.

6. Ratio analysis

Return on invested capital rose to 36.0% in fiscal 2026 from 26.1% in fiscal 2024, on an invested capital base that is small because book equity is negative. Return on equity is not presented: total stockholders' equity has been a deficit in every year here, between $3.1bn and $1.5bn, so the denominator is negative in every year. Retained earnings turned positive at $3.3bn in fiscal 2026 while treasury stock stood at $14.5bn, so the deficit sits on the balance sheet alongside positive retained earnings. Net debt to earnings before interest, tax, depreciation and amortisation fell to 1.79 times from 2.24 times and interest cover rose to 6.0 times from 4.8 times.

7. Quarterly record

Quarterly revenue doubled between Q1 FY2026, $23.4bn, and Q2 FY2027, $47.0bn. Gross margin over the same span fell from 21.1% to a low of 17.8% in Q1 FY2027 and recovered to 20.9% in Q2 FY2027. Operating margin rose from 5.0% in Q1 FY2026 to 11.5% in Q2 FY2027, with one fall, from 9.3% in Q4 FY2026 to 8.3% in Q1 FY2027. Earnings per diluted share in Q2 FY2027 were $6.34, against $1.70 a year earlier.

The first half of fiscal 2027 produced revenue of $90.8bn, gross margin of $17.6bn at 19.4%, and operating income of $9.0bn at 10.0%. That first half is 47.3% of the $192bn full year guidance, so the guidance requires $101.2bn in the second half. Q3 is guided at $49bn, which leaves $52.2bn implied for Q4, 11.1% above the Q2 figure and 56.3% above Q4 FY2026.

8. Cash, working capital and capital structure

Operating activities provided $11.2bn in fiscal 2026, 147.4% more than fiscal 2025 and 1.88 times net income. Payables rose $12.7bn against a rise of $7.0bn in receivables and $4.0bn in inventory, so the three lines together released cash over the year. The cash conversion cycle was 30 days negative, held there by payable days of 109 against inventory days of 34 and receivable days of 45. Inventory days have risen from 23 in fiscal 2024, which the earnings call of 26 February 2026 attributes to positioning inventory ahead of AI shipments.

Dell returned $7.5bn to shareholders in fiscal 2026, 0.87 times free cash flow, through $6.0bn of buybacks covering about 54m shares and $1.5bn of dividends. Diluted shares fell to 684m from 791m in fiscal 2022, a reduction of 13.5%. On 26 February 2026 the board added $10.0bn to the repurchase authorisation, taking the cumulative authorisation to $30.0bn with about $15.2bn remaining, and raised the quarterly dividend 20% to $0.630 per share, an annualised $2.52 and a yield of 0.46% at the current price.

9. Management commentary and the guidance record

Reported revenue landed above the guidance midpoint in each of the last six quarters, by 24.6% in Q1 FY2027 and by 5.6% in Q2 FY2027. Full year fiscal 2027 revenue guidance has been raised twice, from $140bn at the midpoint on 26 February 2026 to $167bn on 28 May 2026 and $192bn on 1 September 2026, a cumulative increase of 37.1%. Guidance for AI optimised server revenue within that moved from $50bn to $60bn to $74bn over the same three dates.

What management said on the calls

The consolidated gross margin rate fell from 20.5% in Q4 FY2026 to 18.1% in Q1 FY2027 and recovered to 21.1% in Q2 FY2027, all on a non GAAP basis. The chief financial officer gave the same explanation on each of the three calls. On 26 February 2026 he put the quarter at 20.5%, a rate that "reflected a mixed shift to AI servers, with AI revenue up more than 4x year-over-year and improved profitability in storage". On 28 May 2026: "Gross margin rate was 18.1%, driven primarily by mix shift to AI servers with AI revenue up nearly 9x year-over-year." On 1 September 2026: "Excluding the mix impact of AI servers, gross margin rate[s] are up year over year." On the profitability of that mix he said on 28 May 2026 that "AI server profitability was in line with our mid-single-digit operating income rate target", against the 7.2% consolidated operating margin reported for fiscal 2026 on a GAAP basis.

Two further statements bear on the forward cases. On component costs the chief operating officer said on 28 May 2026 that "we're repricing, it feels like every day", in an environment he described as inflationary across fuel, raw materials, DRAM, NAND and processors. On operating expenses the chief financial officer guided fiscal 2027 to "approximately 8% of revenue, the lowest level in the company's 42-year history", against the 12.8% reported for fiscal 2026 on a GAAP basis. The company does not state the basis of the 8% figure.

Management declined several analyst requests for detail on those calls. Asked on 26 February 2026 to split the AI order book by chip generation and again by customer type, the chief operating officer answered both times that the company tracks it but, in his words, "I won't do this on the call". Asked on the same call for the component cost assumptions inside guidance, he said the pricing is proprietary and he would not share the percentages. The chief financial officer declined twice on that call to guide free cash flow, and on 1 September 2026 would not answer whether Dell would grow in line with Nvidia in the following year.

10. Sector and competitor analysis

Dell's 20.0% gross margin is the fifth highest of the ten companies in Table 13. The four contract manufacturers run at 8.8% to 12.1% and Super Micro Computer, the other server assembler, at 10.8%. Hewlett Packard Enterprise runs at 31.7%, and the three component and systems suppliers at 36.3% to 71.1%. Dell's 18.8% revenue growth is the fifth lowest of the ten. Operating margin narrows the spread: Dell's 7.2% compares with 4.0% to 8.4% for the four contract manufacturers, 7.1% for Super Micro Computer, a negative 1.3% for Hewlett Packard Enterprise and 17.9% to 60.4% for the three component suppliers.

The earnings multiples in Table 13 are on different periods. Dell trades at 63.3 times fiscal 2026 earnings, above NVDA at 45.6 times and below ANET at 73.7 times. Fiscal 2026 ended on 30 January 2026, before the two guidance raises, so the trailing figure is measured against earnings that the current year guidance is 2.8 times. Fiscal 2027 guidance is $24.37 of GAAP diluted earnings per share, 2.8 times the fiscal 2026 figure, which puts the multiple on that guidance at 22.6 times.

11. The fiscal 2024 revision and material events

Dell revised its fiscal 2024 financial statements in the fiscal 2025 annual report. The filing states that during fiscal 2025 the company discovered accumulated credits from certain suppliers that were not recorded, or not recorded in the correct period, and that an investigation indicated the credits resulted from the actions of certain procurement employees supporting a limited number of suppliers, affecting the Client Solutions Group segment. Net revenue was unaffected. The company concluded the amounts were not material to any prior period on their own but that correcting the cumulative misstatement in fiscal 2025 would be material to that year, so it revised fiscal 2024 under Staff Accounting Bulletin 108.

Two governance items followed the annual meeting. The redomestication from Delaware to Texas took effect on 1 July 2026. Amended and restated bylaws effective 2 July 2026 elect into section 21.373 of the Texas Business Organizations Code, which raises the threshold for submitting a shareholder proposal to holders of at least $1,000,000 in market value or 3% of outstanding voting shares, held continuously for at least six months, with a requirement to solicit holders of at least 67% of the voting power on the proposal.

One legal matter is named in the fiscal 2026 annual report. Lowbruck et al. v. Dell Technologies Inc. et al., filed 28 January 2026 in the United States District Court for the Western District of Texas, is a putative class action under the Employee Retirement Income Security Act against the company, its board and the benefits administration committee, alleging failure to remove imprudent investments from the 401(k) plan, prohibited transactions and failure to monitor plan fiduciaries. Damages are unspecified. The company states it intends to defend the action vigorously and that at 30 January 2026 it does not believe there is a reasonable possibility that a material loss exceeding amounts already accrued across all proceedings has been incurred.

12. Ownership, control and the annual meeting

Michael Dell holds 40.9% of the outstanding common stock, which carries 69.7% of the total voting power on the share counts in the proxy statement ownership table. Class A and Class B shares carry ten votes each and Class C shares one, so the 649,568,287 shares outstanding at the record date carry 3,570,375,178 votes. Class A holds 77.5% of those votes, Class B 13.4% and Class C, the only series listed on the New York Stock Exchange, 9.1%. The fiscal 2026 annual report states that Michael Dell and the Susan Lieberman Dell Separate Property Trust, together with the Silver Lake stockholders, held approximately 91.7% of the total voting power at 9 March 2026. Dell is a controlled company under New York Stock Exchange rules and takes the associated exemptions from certain corporate governance requirements.

Support on the three non election proposals ran from 96.9% to 99.5%. Among the seven Group I directors it ran from 97.0% for Ellen J. Kullman to 99.9% for David Grain, with Michael S. Dell at 98.2%. The one director elected by the Class C holders alone, Lynn Vojvodich Radakovich, drew 88.8%, the lowest of the eight, on the only vote in which the ten vote classes do not participate.

13. Risk factors and internal control

The fiscal 2026 annual report lists forty risk factor headings, one more than fiscal 2025. The addition is that the amount and frequency of share repurchases may fluctuate. The controlled company heading was reworded from an ownership share framing to an explicit voting power framing. No headings were removed. Management concluded that disclosure controls and internal control over financial reporting were effective at 30 January 2026 under the 2013 framework of the Committee of Sponsoring Organizations, and PricewaterhouseCoopers LLP audited that conclusion. No material weakness is disclosed.

14. Stock price, scenarios and sensitivity

The share closed at $549.83 on 23 September 2026, against a fifty two week range of $109.92 to $595.51. The monthly close was $148.08 at the end of February 2026, $420.91 at the end of May 2026 and $549.83 in September 2026; the two guidance raises fall on 28 May and 1 September 2026. On 635.8m shares outstanding at 1 September 2026 the market value is $350bn and enterprise value $370bn, or 3.25 times fiscal 2026 revenue and 33.1 times earnings before interest, tax, depreciation and amortisation.

Core assumptions

The three cases give fiscal 2029 earnings of $54.00, $32.54 and $7.82 per diluted share. At the exit multiples in the assumptions table that is $1,296, $586 and $78 per share against $549.83 today, or +136%, +7% and -86%. Each case moves the revenue path and the exit multiple in the same direction, which widens the range between them.

Critical factors driving the best case

Sensitivity

Earnings in fiscal 2029 are more sensitive to gross margin than to revenue over the ranges shown. At the centre of the grid, $230bn of revenue at an 18.5% gross margin, one point of gross margin is worth about $3.04 of earnings per diluted share and a $40bn move in revenue is worth about $9.79. Across the whole grid earnings range from $4.96 to $62.36.

At the base case exit multiple of 18 times, the current price of $549.83 is covered at fiscal 2029 revenue of $190bn on a gross margin of 22.4%, at $230bn on 18.5%, or at $270bn on 15.8%. The first half of fiscal 2027 ran at 19.4% and Q2 FY2027 at 20.9%. The grid applies one multiple to one year and holds the operating expense, interest, tax and share assumptions of Table 21 constant.

Sources

Every filing read for this analysis, with its accession number. Filings were retrieved through the SEC-API.io service. Market prices are closing prices for 23 September 2026.

Annual reports on Form 10-K, Dell Technologies

Quarterly reports on Form 10-Q, Dell Technologies

Current reports on Form 8-K, Dell Technologies

Proxy statement and annual meeting, Dell Technologies

Annual reports of the comparison group

Earnings calls, hosted by the company and not SEC filings

Disclaimer

Figures are taken from filings made with the Securities and Exchange Commission by Dell Technologies Inc., central index key 1571996, and from the corresponding filings of the peer companies named in Table 13. Earnings call material is identified as such and is company hosted rather than filed. Share prices are closing prices from a market data service. Forward cases in section 14 are estimates built on the stated assumptions and are not forecasts, company guidance or investment advice, except where a figure is identified as company guidance. This document is a factual analysis of filed information. It is not a recommendation to buy, sell or hold any security, and it is not affiliated with or endorsed by the Securities and Exchange Commission.