“I don’t think a company can dictate to a sovereign government what it does with its tools,” Dell told Bloomberg TV on Thursday. “I just don’t think that’s a workable model.”

Dell’s comments were in response to a question about the Trump administration designating Anthropic (ANTHRO) a “supply chain risk” after it failed to reach an agreement with the Pentagon over how its AI technology would be used. As a result of the designation, government agencies and contractors will be required to phase out use of Anthropic’s products.

Anthropic is suing to have the designation overturned.

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The reason? Artificial intelligence.

Looking to the first-quarter of fiscal 2027, Dell anticipates adjusted earnings of $2.90 per share at the midpoint, while sales should be between $34.7B and $35.7B. Included in that is $13B from AI server revenue, which Bank of America said was unexpected.

“While most investors were bracing for a significant cut to the prior telegraphed F27 EPS growth of 15%, Dell went the other way and guided F27 EPS growth of 25%,” Mohan wrote in a note to clients. “While the near term is clearly strong, we are unsure of the demand elasticity created by the swift and significant price actions taken by Dell. We model 2H weaker than 1H (and guide), which could prove to be ultimately conservative (especially given mgmt. track record). [Management] acknowledged the significant headwinds and potential pull forward of demand, however AI demand growth could prove to be an offset (even with a very strong ~100% y/y growth in AI server revs).” Mohan reiterated his Buy rating on Dell and upped his price target to $155 from $135.

Shares jumped more than 12% in premarket trading on Friday.

For the full-year, Dell said its Infrastructure Solutions Group, which houses its AI server business, should see mid-40% sales growth, due in part to 100% growth in AI server revenue. Traditional servers and storage are expected to be up mid-single digits, Dell added.

J.P. Morgan analyst Samik Chatterjee also sang Dell’s praises as he too upped his price target, moving to $165 from $155, after the results.

“Dell’s outlook will serve to highlight to investors the opportunity for stand-out execution to help companies side-step significant cyclical headwinds, with management raising its growth outlook for FY27 earnings to +25% y/y, contrary to broader investor expectations for a reduction of the +15% y/y growth outlook shared by the company previously,” Chatterjee wrote in a note to clients. “Additionally, Dell’s outlook embeds gross margin improvement across core segments, ex-AI, driven by higher margins on newer traditional server platforms as well as improved storage margins from the continued shift to Dell IP, while managing CSG to a balance of profitability and share gains.”

Morgan Stanley analyst Erik Woodring was more tempered in his analysis, as he believes Dell is not out of the woods when it comes to a “once-in-a-generation memory cycle.”

“As we’ve said previously, DELL has a strong track record of execution, an extremely strong AI Server business, and manages the supply chain better than peers,” Woodring wrote in a note to clients. “But our FY27 EPS of $10.97 remains well below management’s $12.90 non-GAAP EPS guidance. Why? Because we struggle to conceptually understand how — excluding AI servers — DELL can significantly increase prices multiple times through the year, drive over 200bps of Y/Y gross margin expansion, and see limited demand elasticity.”

Nonetheless, Woodring, who has an Underweight rating on Dell, did state the company’s AI server demand is “tremendously strong” and even better than he expected. As such, he upped his price target to $110 from $101.

“Within DELL’s AI server backlog are primarily Grace Blackwell orders, while management noted Vera Rubin interest is captured in pipeline,” Woodring added. “Furthermore, DELL expects to hold a mid-single-digit margin rate across these orders, which would equate to $2-2.5B of operating income, and roughly $2.80 of EPS from AI servers alone in FY27. While we are UW-rated DELL due to our concerns around the impact of memory inflation, this is clearly an extremely bright spot for the business into FY27.”

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Management View

• Jeffrey Clarke, COO & Vice Chairman, emphasized, “FY ’26 was a defining year in our company’s history. We delivered record full year revenue and EPS. Revenue reached $113.5 billion, up 19% and EPS grew 27% to $10.30. We converted that performance into record annual cash flow over $11 billion and returned $7.5 billion to shareholders, including 54 million shares repurchased more than doubled last year.”
• Clarke highlighted Dell’s transformation through AI, stating, “In FY ’26, we closed $64.1 billion in AI orders, shipped $25.2 billion and exited with a record $43 billion in AI backlog, powerful proof points that our engineering leadership and differentiated solutions are winning.”
• Clarke reported, “Q4 revenue was $33.4 billion, up 39% and earnings per share was $3.89, up 45%, driven by disciplined execution and demand for our AI solutions.”
• On the supply chain, Clarke detailed, “Shorter quote validity periods, more dynamic pricing and a tighter alignment between our supply chain sales and pricers. We saw the benefit of this in ISG and expect it to extend to CSG.”
• David Kennedy, Chief Financial Officer, stated, “It was a record year for Dell. And as Jeff mentioned, we’re very excited about what’s ahead. The team executed extremely well this quarter, delivering record revenue, EPS and cash flow with strong returns to shareholders.”

Outlook

• Kennedy projected, “For FY ’27, we expect $50 billion in AI revenue, about 100% growth year-over-year. This outlook reflects the composition of our existing backlog, customer readiness and delivery schedules.”
• Full year revenue guidance was set at “$138 billion to $142 billion, up 23% at the midpoint of $140 billion.”
• Kennedy stated, “ISG is expected to grow in the mid-40s, driven by roughly 100% growth in AI revenue. Traditional servers and storage are expected to be up mid-single digits with growth concentrated in traditional servers and more weighted towards the first half. CSG is expected to grow roughly 1%.”
• For Q1 FY ’27, guidance was given for revenue of “$34.7 billion to $35.7 billion, up 51% at the midpoint of $35.2 billion,” with ISG expected to grow over 100%, supported by $13 billion of AI server revenue.
• Operating income for the year is expected to grow approximately 18%, with diluted non-GAAP EPS expected to be $12.90, plus or minus $0.25, up 25% at the midpoint.

Financial Results

• Q4 revenue reached $33.4 billion, gross margin dollars increased to $6.8 billion, and gross margin rate was 20.5%.
• Operating expenses were $3.3 billion, operating income was $3.5 billion, and net income was $2.6 billion.
• ISG revenue was $19.6 billion, up 73%, with $34.1 billion in AI orders, $9.5 billion in AI server shipments, $9 billion in AI revenue, and an ending backlog of $43 billion.
• Traditional server and networking revenue was $5.9 billion, up 27%; storage revenue was $4.8 billion, up 2%.
• CSG revenue was $13.5 billion, up 14%; commercial revenue grew 16% to $11.6 billion; consumer revenue remained flat at $1.9 billion.
• Cash flow from operations was $4.7 billion, with $13.3 billion in cash and investments at quarter end.
• The annual dividend was raised by 20% to $2.52 per share, and the Board approved a $10 billion increase in share repurchase authorization.

Q&A

• Timothy Long, Barclays: Questioned the scalability and margin sustainability of AI servers. Clarke responded, “We operated throughout the quarter and over the course of the year in that mid-single-digit operating income. With what we see in front of us, there’s no reason to change that. That is our guidance of where we can operate this business, and we’re going to continue to grow it.”
• Mark Newman, Bernstein: Asked about AI server profitability and memory price impacts. Clarke replied, “We maintained throughout the quarter in the guidance that David just talked about that we can operate AI at the velocity we’re seeing in the mid-single digits… We have a significant technology transition in front of us. We see our ability to work our way through that and maintain mid-single digits.”
• Amit Daryanani, Evercore: Inquired about the Vera Rubin cycle and free cash flow. Clarke said, “We’re expecting a smoother transition. We’re expecting all of the manufacturing lessons and lessons around test that are implemented into the next architecture to allow us to ramp with more velocity and speed.” Kennedy added, “We expect another really strong cash or cash year ahead.”
• Benjamin Reitzes, Melius: Queried storage’s contribution to margins. Clarke explained, “Our Dell IP portfolio is now a greater percentage of the mix year-over-year. We expect it to grow FY ’27 over ’26, it will be a greater percentage of mix next year than this year. That’s part of the profit contribution that David has outlined in our guidance.”
• Erik Woodring, Morgan Stanley: Asked about memory price inflation and margin protection strategies. Clarke said, “The spot market for a gigabit of DRAM over the last 6 months is up nearly 5.5x… All of the best practices that we learned during COVID, as I mentioned in the last call, we put in place and we put in place faster.”

Sentiment Analysis

• Analysts expressed strong interest in AI server momentum, margin sustainability, and the impact of memory costs, with a neutral to slightly positive tone, and multiple congratulatory remarks for execution and guidance.
• Management maintained a confident and disciplined tone in prepared remarks and Q&A, using phrases such as “We are excited about what’s ahead” and “We are positioned for another record year.”
• Compared to the previous quarter, both management and analysts have shifted to a more confident and growth-oriented tone, particularly regarding AI and cash generation.

Quarter-over-Quarter Comparison

• Q4 saw a pronounced acceleration in AI business scale, with AI server orders nearly tripling from $12.3 billion in Q3 to $34.1 billion in Q4, and AI backlog more than doubling from $18.4 billion to $43 billion.
• Revenue and EPS growth rates were higher in Q4, and cash flow generation reached record levels.
• Management’s guidance language shifted from high confidence to explicit targets for AI revenue and overall growth, compared to the more cautious outlook of the previous quarter.
• Analysts’ focus shifted further toward AI demand, margin sustainability, and the company’s ability to manage memory price escalation and supply chain challenges.
• Strategic priorities evolved from navigating cost increases and supply chain resilience to scaling AI and capturing market share in PC and storage.

Risks and Concerns

• Management cited “unprecedented AI demand creating sustained supply tightness and frequent pricing resets.”
• Clarke noted, “Our priorities are straightforward. First, secure supply; next, price to protect our margin rates.”
• Analyst questions centered on memory price inflation, margin protection, and the impact of supply constraints on delivery schedules.
• Management outlined mitigation strategies including dynamic pricing, shortened quote validity, direct supplier relationships, and rapid operational adjustments.

Final Takeaway

Dell closed FY ’26 with record results, driven by surging AI demand and robust execution across all business segments. The company enters FY ’27 with strong momentum, a $43 billion AI backlog, and a clear focus on scaling its AI business, targeting $50 billion in AI revenue and $140 billion in total revenue. Management’s disciplined approach to supply chain management, pricing flexibility, and capital returns positions Dell to navigate ongoing supply constraints and cost pressures while pursuing further market share gains and profitability growth in the year ahead.

Read the full Earnings Call Transcript

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For the period ending Jan. 30, Dell said it earned an

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Dell Technologies (DELL) is scheduled to announce Q4 earnings results on Thursday, February 26th, after market close.

Wall Street, on average, expects the global technology company to post a quarterly EPS of $3.53 (+31.7% Y/Y) on revenue of $31.68B (+32.4% Y/Y).

Dell reported mixed results for the fiscal third-quarter and raised its full-year sales forecast, aided in part by artificial intelligence servers. For fiscal 2026, Dell expects revenue to be between $111.2B and $112.2B

“Given concerns around memory inflation, expect DELL to have benefited from a demand pull-in across PCs and traditional servers as customers will have looked to get ahead of ASP increases,” Evercore analyst wrote in a note. “While memory-driven elasticity, particularly at the low end of PCs, remains a wildcard, we expect share gains, higher ASPs and commercial mix to support revenue growth even in a down unit environment.”

“Dell Technologies is positioned to benefit from AI infrastructure growth, with the ISG segment driving double-digit revenue and order momentum,” pointed out a recent Seeking Alpha analysis.

Over the last 2 years, DELL has beaten EPS estimates 75% of the time and has beaten revenue estimates 63% of the time.

Over the last 3 months, EPS estimates have seen 21 upward revisions and 0 downward. Revenue estimates have seen 19 upward revisions and 0 downward.

Seeking Alpha’s Quant recommended the stock as a Strong Buy while the Wall Street analysts see the company as a Buy.

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J.P. Morgan kept its Neutral rating and lowered the price target on the stock to $19 from $21. The firm said that memory

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