Dell Technologies Inc Earnings - Q3 2025 Analysis & Highlights
Byline: Dell Technologies Inc. reported strong Q3 2026 results, driven by record revenue and EPS, and highlighted exceptional AI server demand and backlog. Management discussed financial performance, business segment results, capital allocation, industry trends, competitive landscape, macroeconomic factors, growth opportunities, and financial guidance. They also addressed the impact of rising commodity costs and strategies to mitigate them.
Key Financial Results:
Total revenue reached $27 billion, up 11%.
Earnings per share (EPS) increased 17% to $2.59.
Gross margin was up 4% to $5.7 billion, or 21.1% of revenue.
Operating income grew 11% to $2.5 billion, or 9.3% of revenue.
Cash and investments ended the quarter at $11.3 billion, up $1.6 billion sequentially.
Business Segment Results:
Infrastructure Solutions Group (ISG) revenue was a Q3 record $14.1 billion, up 24%.
Client Solutions Group (CSG) revenue increased 3% to $12.5 billion.
ISG operating income was a Q3 record $1.7 billion, up 16%.
CSG operating income was $0.7 billion, or 6% of revenue.
Servers and networking revenue reached a Q3 record $10.1 billion, up 37%.
Storage revenue was $4 billion, down 1%.
Capital Allocation:
Returned $1.6 billion of capital to shareholders.
Repurchased 8.9 million shares of stock at an average price of $140 per share.
Paid a dividend of approximately $0.53 per share.
Industry Trends and Dynamics:
AI server demand remained exceptionally strong.
Traditional x86 compute demand continues to benefit from workload expansion and AI, driving broader IT modernization and consolidation.
PC refresh cycle remains durable, supported by an aging installed base and a significant portion of systems not yet upgraded to Windows 11.
Commodity supply environment was deflationary in Q3.
Competitive Landscape:
Dell's competitive edge in AI is its ability to engineer bespoke high-performance solutions, deploy large-scale clusters rapidly, and support them globally, all backed by an unmatched ecosystem and flexible financing offerings.
Dell's direct model allows it to move demand where supply is and to act to market signals quicker than competitors.
Macroeconomic Environment:
Looking ahead to next year, there will be dynamics that Dell will have to navigate, but they are confident in their ability to secure supply and adjust pricing as needed.
The cost basis is going up across all products.
Growth Opportunities and Strategies:
Capitalize on AI infrastructure buildouts, expanding traditional infrastructure demand, and the ongoing PC refresh cycle.
Focus on Dell IP storage.
Drive revenue growth and gain market share in CSG by improving execution.
Financial Guidance and Outlook:
Expect Q4 revenue between $31 billion and $32 billion, up 32% at the midpoint of $31.5 billion.
Expect Q4 diluted non-GAAP EPS to be $3.50 plus or minus $0.10, up 31% at the midpoint.
Expect to ship roughly $9.4 billion of AI servers in Q4, bringing full year shipments to roughly $25 billion.
Expect FY 2026 revenue of $111.7 billion, up 17%, and non-GAAP EPS of $9.92, up 22% at the midpoint.
