---
title: "DELL: AI Surges, Legacy Biz Heats Up; Firing on All Cylinders!"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/41243746.md"
description: "In after-hours trading on May 29 (Beijing time), DELL.N reported FY2027 Q1 results (quarter ended Apr 2026).1) Core metrics: $Dell Tech(DELL.US) revenue was $43.8bn (+87% YoY), beating cons. of $39.0bn.Sequential revenue increased by $10.5bn, mainly driven by growth in AI server shipments. GPM was 17.8%, down 240bps QoQ, above the 16% cons.The margin decline..."
datetime: "2026-05-29T02:32:24.000Z"
locales:
  - [en](https://longbridge.com/en/topics/41243746.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/41243746.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/41243746.md)
author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)"
---

# DELL: AI Surges, Legacy Biz Heats Up; Firing on All Cylinders!

DELL released its FY2027 Q1 results (quarter ended Apr 2026) after hours on May 29 Beijing time. The print came post the US close.

**1\. Core results:**$Dell Tech(DELL.US) **revenue was $43.8bn, up 87% YoY, well ahead of the Street at $39.0bn**. QoQ revenue rose by $10.5bn, driven mainly by AI server shipments.

**GPM was 17.8%, down 240bps QoQ, better than the 16% consensus**. The decline reflected higher storage costs and mix shift toward lower-margin hardware, which together compressed margins.

**2\. ISG (Infrastructure Solutions): revenue was $29.0bn, up $9.4bn QoQ, smashing consensus at $24.9bn.** The QoQ delta came from AI server growth and a rebound in traditional servers.

**① AI servers: AI server revenue was approx. $16.1bn, above the raised buyside est. of $15.6bn.**

**New AI orders reached $24.4bn this quarter, and AI backlog ended at $51.3bn.** Dolphin Research estimates next-quarter AI server revenue at $15.5bn+, pointing to a clear supply-constrained setup.

**② Other:** beyond AI servers, legacy businesses also rebounded. **Traditional server-related revenue was approx. $8.5bn, up 92% YoY and far above the Street at $5.0bn, the main source of the upside surprise**. Storage delivered roughly $4.3bn of revenue, up 8% YoY**.**

**3\. CSG (Client Solutions): revenue was $14.6bn, up 17% YoY and ahead of the Street at $13.9bn.** By mix, **commercial customers contributed $13.0bn, up 18% YoY**, while consumer revenue was $1.6bn, up 9% YoY.

**4\. Next-quarter guide: FY2027 Q2 revenue guided to $44–45bn, above the Street at $37.6bn.** **GAAP EPS guided to $4.5**, also ahead of the Street at $3.0.

**Dolphin Research view: across-the-board beat, AI and traditional servers both take off**

DELL delivered a broad beat with QoQ revenue up $10.5bn, and growth continued to accelerate. The quarter was led by ISG shipments, especially servers.

AI revenue reached $16.1bn, up $7.2bn QoQ and **above the raised Street mark at $15.6bn**. **New AI orders were $24.4bn, beating the $10–15bn range, and AI backlog reached $51.3bn, laying the groundwork for sustained high growth**.

Heading into the print, AI server expectations had already been raised. The biggest surprise came from traditional servers: **legacy server revenue hit $8.5bn, up 92% YoY vs. $5.0bn expected, the key driver of the beat**. **Consensus had looked for a steady uptick, but demand appears to be inflecting sharply**.

**The recent share rally has been powered by rising AI server expectations.** The transition from GB200 to GB300 should lift ASPs. With both volume and price tailwinds, plus a rebound in traditional servers, **the high-growth AI profile has pushed valuation beyond its historical upper band**.

Management raised full-year guidance, **now calling for FY revenue of $165–169bn, up $27bn from the prior $138–142bn**. The quarter alone exceeded the old quarterly guide by roughly $10bn. **Dolphin Research views the full-year outlook as conservative and sees room for further raises**.

Outside the print, investors are focused on the following:

**a) Storage remains tight**: the main impact is on PCs, where the cost-to-price-to-demand pass-through has weighed on end demand and slowed market growth to 4% this quarter.

**Separately, rising storage prices are pressuring hardware margins** across PCs and servers. GPM fell to 17.8% this quarter, partly due to higher storage costs, yet still beat the 16% consensus and **showcased solid cost control**.

**b) AI servers: with legacy businesses under pressure, AI progress is the key swing factor.**

Hyperscalers have lifted capex outlooks. **Dolphin Research estimates the four core cloud vendors (Google, Meta, Microsoft, Amazon) could spend $700bn+ in 2026, implying ~80% YoY growth**.

Against that backdrop, the market was hesitant when AI server revenue stayed below $10bn. **This quarter’s $16.1bn, up $7.2bn QoQ, delivered tangible high growth**. It reflects robust demand and higher ASPs as deployments move from GB200 to GB300.

Dell has deep collaboration with Nvidia, offering Blackwell and Vera Rubin options, and participating in the next-gen Feynman platform. **Especially for Tier-2 CSPs (Neocloud) and public-sector/enterprise clients**, who typically do not buy from ODMs due to integration needs, **they prefer OEMs that deliver full-stack solutions**.

**Dell provides full-stack services** spanning desktop AI workstations (GB10/GB300 DGX), rack servers, storage, networking, software orchestration (OpenManage), and services (installation, tuning, 24/7 support). Its end-to-end offering positions Dell to win more orders in Tier-2 CSP and public-sector markets.

DELL’s market cap is $204.7bn, implying ~16x on FY2027 post-tax core earnings (assumes 60% revenue growth, 17% GPM, 17% tax rate). **Historically, the multiple has ranged 8–20x, and after major estimate revisions the current PE sits slightly above the midpoint**.

Following the rally, AI acceleration is being priced in. **Top-tier houses now model $65bn of AI revenue, +163% YoY, implying expectations for another guidance raise post-print**.

Management lifted the full-year AI guide to $60bn (from $50bn), **but Dolphin Research sees this as conservative**. **First, H1 AI revenue should reach $31.6bn, and with Rubin ramping in H2, revenue should not be lower**. **Second, AI backlog already exceeds $50bn and is still growing alongside revenue, indicating supply remains the binding constraint**.

**Overall, AI is accelerating, traditional servers are clearly rebounding, PCs and margins are better than expected, and operating trends are broadly improving.** Guidance could be raised again. With AI tailwinds and high growth, a legacy valuation lens no longer applies, and the multiple could break above its historical ceiling.

Below are Dolphin Research’s detailed notes on DELL (DELL.N):

**I. DELL overall results**

**1.1 Revenue**

**In FY2027 Q1 (26Q1), DELL delivered revenue of $43.8bn, +87% YoY,** above the Street at $39.0bn**.** QoQ revenue rose by $10.5bn on ISG strength, **with AI revenue up $7.2bn QoQ and traditional servers up $2.7bn QoQ**.

**1.2 Gross profit**

**In FY2027 Q1 (26Q1), DELL posted GP of $7.8bn, +35.6% YoY.**

**GPM was 17.8%, down 240bps QoQ,** better than the 16% consensus**.**

Main drivers: (1) higher storage prices weighed on GPM; (2) mix shift toward lower-margin ISG diluted overall margins.

**1.3 Opex**

**FY2027 Q1 (26Q1) opex was $4.1bn, +9% YoY. Operating leverage lowered the opex ratio to 9.4%.**

Breakdown: **1) R&D was $980mn, +22% YoY, with spend growth accelerating**. **2) SG&A was $3.1bn, +6% YoY**.

**1.4 Net profit**

**FY2027 Q1 (26Q1) core operating profit was $3.66bn, +214% YoY,** with a core margin of 8.3%. Profit growth was driven primarily by the surge in revenue.

**II. Core segments: AI accelerates, legacy rebounds**

By segment, **ISG continued to scale on AI server strength, reaching 66% of total this quarter**.

Per prior guidance, **FY2026–FY2030 ISG CAGR (11–14%) should outpace CSG (2–3%), lifting ISG mix further**.

ISG is the company’s most important segment. Detail as follows:

**2.1 ISG (Infrastructure Solutions)**

**In FY2027 Q1 (26Q1), ISG revenue was $29.0bn, +181% YoY,** well above the Street at $24.9bn**.**

**Details: ① AI servers delivered approx. $16.1bn, up $7.2bn QoQ, the bulk of ISG growth;** ② traditional servers and related lines were $8.5bn, +92% YoY; ③ storage was $4.3bn, +8% YoY.

ISG growth was powered by both AI and traditional servers. **Legacy servers inflected sharply this quarter, while AI now accounts for over half of ISG**.

Beyond in-quarter AI revenue, management disclosed leading indicators on AI orders and backlog. **New AI orders were $24.4bn, above the $10–15bn range, and AI backlog reached $51.3bn, underwriting continued high growth in FY2027**.

On supply, **Dell has a deep partnership with Nvidia**, offering Blackwell and Vera Rubin options and participating in the next-gen Feynman platform. As deployments move GB200 → GB300 → Rubin, AI server ASPs should keep rising.

On the customer side, **Tier-2 CSPs (Neocloud) and public/enterprise clients** typically do not buy directly from ODMs due to integration needs. **They prefer OEMs with complete solutions**. **Dell’s end-to-end stack makes it a preferred choice for these customers**, creating more order opportunities.

Although **management raised the full-year AI guide to $60bn (from $50bn), Dolphin Research still sees it as conservative**. **H1 alone should reach $31.6bn, and with Rubin upgrades, H2 should grow further**. With $50bn+ of backlog in hand, another guide hike is likely.

**2.2 CSG (Client Solutions)**

**In FY2027 Q1 (26Q1), CSG revenue was $14.6bn, +17% YoY,** beating the Street at $13.9bn**.**

By customer type, **commercial revenue was $13.0bn, +18% YoY**, while consumer revenue was $1.6bn, +9% YoY.

**Global PC shipments were 65.6mn units in 1Q26, +4% YoY with growth slowing. DELL shipped 10.3mn units, +7% YoY, outpacing the market and lifting share to 15.7%.**

While overall PC demand remains soft, **Dell’s skew to commercial customers limits exposure to consumer weakness, with commercial PCs still up 18% this quarter**.

With storage costs rising, **Dell implemented uniform price increases on PCs early this year**. Pricing helped pass through part of the cost pressure, yet shipments still grew YoY, underscoring brand strength and execution.

Net-net, storage tightness will continue to weigh on overall PC demand, but given Dell’s customer mix and execution, CSG should remain on a gradual upward track.

<End here\>

Related Dolphin Research coverage on DELL (DELL.N):

Earnings calls

Feb 27, 2026 Trans: [Dell (Trans): AI orders exclude Rubin, legacy can stay positive](https://longportapp.cn/zh-CN/topics/38934071)

Feb 27, 2026 First Take: [DELL: Can doubling AI mute 'storage tightness' worries?](https://longportapp.cn/zh-CN/topics/38932092)

Nov 26, 2025 Trans: [Dell (Trans): Value lies in integrated L11+ solutions](https://longportapp.cn/zh-CN/topics/36730886)

Nov 26, 2025 First Take: [DELL: Storage hikes pinch, AI guide supports](https://longportapp.cn/zh-CN/topics/36727893)

Aug 29, 2025 Trans: [Dell (Trans): AI servers ship roughly evenly H1 vs. H2](%E6%88%B4%E5%B0%94%EF%BC%88%E7%BA%AA%E8%A6%81%EF%BC%89%EF%BC%9A%20AI%20%E6%9C%8D%E5%8A%A1%E5%99%A8%EF%BC%8C%E4%B8%8A%E4%B8%8B%E5%8D%8A%E5%B9%B4%E5%8F%91%E8%B4%A7%E9%87%8F%E7%9B%B8%E5%AF%B9%E5%9D%87%E8%A1%A1)

Aug 29, 2025 First Take: [DELL: Are 'frenzied' AI orders a flash in the pan?](https://longportapp.cn/zh-CN/topics/33471980)

Deep dives:

Jul 11, 2025 Deep Dive: [Two AI buffs: Is spring coming back for Dell?](https://longportapp.cn/zh-CN/topics/31713972)

Jul 9, 2025 Deep Dive: [Dell: Riding the AI wave, a comeback for a legacy name?](https://longportapp.cn/zh-CN/topics/31614330)

Risk disclosure and disclaimer: [Dolphin Research disclaimer and general disclosure](https://support.longbridge.global/topics/misc/dolphin-disclaimer)

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## Comments (2)

- **Spencer · 2026-05-29T02:56:07.000Z · 👍 2**: Last night, I joined the party at the front line. The hot sales of DELL AI servers may subsequently lead to repurchases of its storage products.
  - **戴维神！** (2026-05-29T04:38:19.000Z): Entered at just the right time