DELL Q3 Earnings Beat Estimates, Revenues Rise Y/Y, Shares Up

Dell Technologies DELL reported non-GAAP earnings of $2.59 per share in the third quarter of fiscal 2026, beating the Zacks Consensus Estimate by 4.44%. The bottom line increased 17% year over year.

Revenues increased 11% year over year to $27.01 billion, but missed the consensus mark by 0.98%. The year-over-year rise was primarily driven by record AI server shipments.

After the results were announced, shares of DELL gained 4.53% in pre-market trading.

DELL’s Q3 Top-Line Details

Product revenues rose 16% year over year to $21.2 billion, missing the Zacks Consensus Estimate by 0.16%. 

Dell Technologies Inc. Price, Consensus and EPS Surprise

Dell Technologies Inc. price-consensus-eps-surprise-chart | Dell Technologies Inc. Quote

Services revenues declined 5% year over year to $5.75 billion, beating the Zacks Consensus Estimate by 3.95%.

Infrastructure Solutions Group (ISG) revenues increased 24% year over year to $14.10 billion.

The upside can be attributed to servers and networking revenues of $10.12 billion, which grew 37% year over year, driven by demand strength across both AI and traditional servers. Storage revenues decreased 1% year over year to $3.98 billion.

In the reported quarter, Dell Technologies’ AI-optimized server momentum saw an increase of $12.3 billion in orders and $30 billion of orders year to date.

Dell Technologies shipped $5.6 billion worth of AI servers in the fiscal third quarter, and the AI server backlog remained healthy at $18.4 billion.

CSG revenues were $12.47 billion, representing a 3% year-over-year increase. Commercial Client revenues increased 5% year over year to $10.62 billion, while Consumer revenues fell 7% to $1.85 billion.

DELL’s Operating Details

The company’s fiscal third-quarter non-GAAP gross profit increased 4% year over year to $5.68 billion. The gross margin contracted 140 basis points (bps) year over year to 21.1%.

SG&A expenses fell 6% year over year to $2.72 billion. Research and development expenses increased 1% year over year to $752 million in the reported quarter.

Non-GAAP operating expenses declined 2% year over year to $3.18 billion. Operating expenses, as a percentage of revenues, contracted 150 bps on a year-over-year basis to 11.8%.

The non-GAAP operating income was $2.50 million, up 11% year over year. The operating margin expanded 10 bps year over year to 9.3%.

The ISG segment’s operating income jumped 16% year over year to $1.74 billion. The CSG segment’s operating income was $748 million, which was flat year over year.

DELL’s Balance Sheet & Cash Flow Details

As of Oct. 31, 2025, DELL had $9.56 billion in cash and cash equivalents compared with $8.14 billion as of Aug. 1, 2025.

Total debt was $31.24 billion as of Oct. 31, 2025, compared with $28.68 billion as of Aug. 1, 2025.

The company generated cash flow from operations of $1.2 billion. The adjusted free cash flow was $1.67 billion in the third quarter of fiscal 2026.

In the third quarter of fiscal 2026, Dell Technologies returned $1.6 billion of capital to its shareholders.

DELL’s Q4 & FY26 Guidance

For the fourth quarter of fiscal 2026, revenues are expected to be between $31 billion and $32 billion, with the mid-point of $31.5 billion suggesting 32% year-over-year growth.

Dell Technologies anticipates 34% growth at the midpoint for the combined ISG and CSG, with ISG growing in the mid-sixties and CSG growing in the low to mid-single digits.

Non-GAAP earnings are expected to be $3.50 per share (+/- 10 cents) at the midpoint, indicating 31% growth year over year.

For fiscal 2026, revenues are expected to be between $111.2 billion and $112.2 billion, with the mid-point of $111.7 billion indicating 17% year-over-year growth.

Full-year AI server shipments expected to be roughly $25 billion, up more than 150%.

Dell Technologies anticipates 20% growth at the mid-point for ISG and CSG combined, with ISG expected to increase in the mid-to-high thirties, with CSG likely to grow in the low to mid-single digits. 

Non-GAAP earnings are expected to be $9.92 per share (+/- 10 cents) at the midpoint, up 22% year over year.

Zacks Rank & Stocks to Consider

Dell Technologies has a Zacks Rank #3 (Hold) at present.

Advanced Energy Industries AEIS, Allot ALLT, and Amphenol APH are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. Each stock sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Advanced Energy Industries shares have increased 78.1% year to date. The Zacks Consensus Estimate for Advanced Energy Industries' 2025 earnings is pegged at $6.13 per share, up by 7.92% over the past 30 days, implying growth of 65.23% from the year-ago quarter’s reported figure.

Allot shares have gained 62.2% year to date. The Zacks Consensus Estimate for Allot 2025 earnings is pegged at 14 cents per share, unchanged over the past 30 days, indicating year-over-year growth of 250%.

Amphenol shares have gained 98.5% year to date. The Zacks Consensus Estimate for Amphenol’s 2025 earnings has increased 2.17% to $3.29 per share in the past 30 days, indicating year-over-year growth of 74.07%.

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