The thing you should look at most in Dell’s ( $DELLB ) earnings report isn’t “better-than-expected” results—it’s the order book.
In FY27 Q2, revenue was $46.97 billion, up 58% year over year. Adjusted EPS was $7.04, up 203% year over year, while the market expected about $4.9. What’s truly explosive is the orders: single-quarter new AI server orders hit $60.9 billion; AI server backlog surged to $95.0 billion—nearly doubling within a quarter. Riding the momentum, management raised full-year revenue guidance from $167.0 billion to $192.0 billion, lifted adjusted EPS guidance from $17.90 to $25.50, and increased the AI server revenue target from $60.0 billion to $74.0 billion. The stock was up as much as 8%-9% pre-market.
But the other half of the data is just as important: overall gross margin is only about 21%, and free cash flow fell about 47% year over year. On the same supply chain, Nvidia ( $NVDAB ) has a gross margin around 75%. This is where the “AI assembly shop” sits: demand is real and the scale is enormous, but pricing power is held upstream by chips and memory. ISG segment operating margin moved from 10.5% in Q1 back to 15%, suggesting that this quarter it successfully passed through component price increases to customers—credit where it’s due. Still, with $95.0 billion in backlog, the company must front the capital to buy memory and GPUs first, so cash flow gets absorbed before the orders translate into deliveries. Whether backlog is an asset or a liability depends on the component prices at the time of delivery.
Practical impact on the sector: First, on the demand side it directly slapped the “AI capital expenditure is topping out” narrative—$60.9 billion of new orders isn’t wishful thinking. Second, the bottleneck has shifted from compute to memory and storage; the price-increase chain is more worth watching than the finished systems. Third, transmission to crypto is liquidity—AI capex helps support risk appetite in US equities, and crypto’s high beta then has something to lean on.
So the question becomes: with a $95.0 billion order book and a 21% gross margin, how many times of valuation multiples are you willing to pay for this business?
#Dell earnings beat drives 8% stock jump
In FY27 Q2, revenue was $46.97 billion, up 58% year over year. Adjusted EPS was $7.04, up 203% year over year, while the market expected about $4.9. What’s truly explosive is the orders: single-quarter new AI server orders hit $60.9 billion; AI server backlog surged to $95.0 billion—nearly doubling within a quarter. Riding the momentum, management raised full-year revenue guidance from $167.0 billion to $192.0 billion, lifted adjusted EPS guidance from $17.90 to $25.50, and increased the AI server revenue target from $60.0 billion to $74.0 billion. The stock was up as much as 8%-9% pre-market.
But the other half of the data is just as important: overall gross margin is only about 21%, and free cash flow fell about 47% year over year. On the same supply chain, Nvidia ( $NVDAB ) has a gross margin around 75%. This is where the “AI assembly shop” sits: demand is real and the scale is enormous, but pricing power is held upstream by chips and memory. ISG segment operating margin moved from 10.5% in Q1 back to 15%, suggesting that this quarter it successfully passed through component price increases to customers—credit where it’s due. Still, with $95.0 billion in backlog, the company must front the capital to buy memory and GPUs first, so cash flow gets absorbed before the orders translate into deliveries. Whether backlog is an asset or a liability depends on the component prices at the time of delivery.
Practical impact on the sector: First, on the demand side it directly slapped the “AI capital expenditure is topping out” narrative—$60.9 billion of new orders isn’t wishful thinking. Second, the bottleneck has shifted from compute to memory and storage; the price-increase chain is more worth watching than the finished systems. Third, transmission to crypto is liquidity—AI capex helps support risk appetite in US equities, and crypto’s high beta then has something to lean on.
So the question becomes: with a $95.0 billion order book and a 21% gross margin, how many times of valuation multiples are you willing to pay for this business?
#Dell earnings beat drives 8% stock jump