Dell Booked More AI Server Orders in 3 Months Than It Recorded in Total Revenue
Dell Booked More AI Server Orders in 3 Months Than It Recorded in Total Revenue
Daniel Sparks, The Motley FoolSun, September 13, 2026 at 12:53 AM UTC
0
Image source: The Motley Fool.Key Points -
Dell booked a record $60.9 billion of AI server orders in its fiscal 2027 second quarter -- more than its total revenue.
The company exited the quarter with a $95 billion AI server backlog.
Second-quarter operating cash flow fell to $2.2 billion from $2.5 billion a year earlier.
10 stocks we like better than Dell Technologies ›
Shares of Dell Technologies(NYSE:DELL) surged as much as 12% on Friday, touching a fresh 52-week high. The hardware giant's stock has more than quintupled from its 52-week low as of this writing.
Much of the latest leg has come since the company posted fiscal 2027 second-quarter results (the quarter ended July 31, 2026) on Sept. 1.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again.In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
One comparison in that report stands out to me above everything else: Customers ordered $60.9 billion of artificial intelligence (AI) servers during the fiscal second quarter. Dell's total revenue (across servers, storage, and PCs) came in at $47 billion.
Those are two different kinds of numbers, to be sure. An order is a booking, a commitment that becomes revenue only when Dell builds and delivers the machines. Revenue is what the company recognized in the period.
Demand, in other words, is no longer the debate. What the next two years of earnings look like depends on how quickly Dell converts those commitments into delivered servers, and on what the conversion costs.
Demand is outrunning the income statement
The fiscal second quarter itself was exceptional. Not only did revenue climb 58% year over year, reaching a record $47 billion, but non-GAAP (adjusted) earnings per share also tripled to $7.04. Dell recognized a record $16.4 billion of AI server revenue, up 100% year over year. And with $60.9 billion of new orders coming in, it exited the quarter with a record $95 billion backlog.
Dell booked $24.4 billion of AI orders and recognized $16.1 billion of AI server revenue in the fiscal first quarter. In other words, orders more than doubled sequentially while recognized revenue barely budged.
Management now calls for $192 billion of full-year revenue, a $25 billion increase from its previous outlook and 69% above last year. AI server revenue guidance went from $60 billion to $74 billion, and adjusted earnings per share guidance now sits at $25.50, up 148% year over year.
Can Dell build servers fast enough?
Dell has recognized about $16 billion of AI server revenue in each of the last two quarters. I'd argue the limit right now is how fast the company can build and deliver servers, not how many customers want them.
To hit $74 billion for the full year, the second half needs to accelerate to about $41.5 billion of AI server revenue -- nearly $21 billion a quarter. And even at the faster pace, the backlog represents more than a year of AI server revenue before any new orders.
The margin worry, at least, eased this quarter. Dell's infrastructure segment revenue soared 89% year over year to $31.8 billion, and the segment's operating margin came in at 15%, expanding from the fiscal first quarter's 10.5% and from 8.8% a year earlier, helped by what Dell calls disciplined pricing. That expansion came despite what the company describes as substantial inflation in memory component costs.
Advertisement
The cash hasn't caught up yet
However, all of that growth is consuming cash first. Operating cash flow slipped to $2.2 billion, from $2.5 billion a year earlier, even as net income more than tripled to $4.1 billion. Inventories have doubled since the end of January to $21.3 billion as Dell stockpiles components and builds against its backlog. And financing receivables (money Dell's in-house financing arm lends customers to pay for their purchases) climbed to $20.4 billion from $14.3 billion over the same stretch. Dell's adjusted free cash flow, which adds that lending back, did come in at $8.1 billion, up 224% year over year.
Dell also priced a $5 billion senior notes offering this week, partly to repay notes coming due this year. Sure, funding a build-out of this size takes working capital, and Dell can borrow at reasonable rates. But reported earnings are running well ahead of collected cash for now -- and the next two years of profits depend on those orders turning into delivered, paid-for systems on schedule.
Where does that leave the stock? Shares trade around $562 as of this writing -- about 33 times the company's earnings over the past 12 months, but about 22 times the adjusted earnings per share now guided for this fiscal year. For a company guiding for nearly 70% revenue growth, that price-to-earnings multiple is arguably fair, as long as the conversion stays on schedule.
Ultimately, I wouldn't chase the stock after Friday's surge. For investors who already own shares, I think the backlog is a good reason to keep holding.
And if operating cash flow starts catching up with those record profits over the next couple of quarters, I'd consider buying, even at a higher price.
Should you buy stock in Dell Technologies right now?
Before you buy stock in Dell Technologies, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Dell Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $417,413!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,341,294!*
Now, it’s worth noting Stock Advisor’s total average return is 950% — a market-crushing outperformance compared to 210% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of September 12, 2026.
Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Source: “AOL Money”
