$Dell Technologies Inc.(DELL)$' upcoming earnings report for Fiscal Q3 2026 (Period ending October 2025) is scheduled to be released on Tuesday, November 25, 2025 (After Market Close).
Dell stock has pulled back significantly (~15-20%) heading into this print. This creates an interesting "oversold" setup where the bar for a positive reaction might be lower than it was a few months ago. The market is anxious about AI server margins and the rising cost of memory components.
DELL earnings would be interesting as we would be seeing how the AI narrative would be like when investors are anxious to look at its AI server margins, and this should give me some clues whether the AI bubbles might really formed?
Earnings Per Share (EPS) Estimates
Analysts and investors typically focus on the Non-GAAP (Adjusted) EPS number for Dell to gauge performance against operational expectations.
Consensus Estimate (Non-GAAP): ~$2.47 per share.
Company Guidance (Non-GAAP): $2.45 per share (plus or minus $0.10).
GAAP Estimate: Some data providers show a GAAP consensus closer to $2.07 – $2.26 per share.
Key Context: The consensus of $2.47 sits slightly above the midpoint of Dell's own guidance, suggesting Wall Street is optimistic about the company's ability to execute, likely driven by AI server momentum.
Revenue Estimates
Consensus Estimate: ~$27.26 Billion.
Company Guidance: $26.5 Billion – $27.5 Billion (Midpoint: $27.0B).
Growth Context: Achieving the midpoint of $27 billion would represent approximately 10-11% year-over-year growth, signaling a recovery from previous cyclical lows in the PC market and surging demand in the infrastructure segment.
Summary of Dell Technologies (DELL) Fiscal Q2 2026 Earnings
Dell reported its Fiscal Q2 2026 earnings on August 28, 2025, delivering a headline beat on both top and bottom lines. However, the report triggered a negative market reaction due to underlying concerns about the quality of that growth (profitability) and the sustainability of demand.
1. The Headline Numbers
Revenue: $29.8 Billion (Up +19% YoY), beating estimates.
Non-GAAP EPS: $2.32 (Up +19% YoY), beating estimates of ~$2.29.
Full-Year Guidance: Raised revenue guidance to $105B–$109B and EPS to $9.55 (midpoint).
2. Segment Performance
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Infrastructure Solutions Group (ISG): The star of the show regarding revenue.
Revenue: $16.8B (Up +44% YoY).
Servers & Networking: $12.9B (Up +69% YoY), driven almost entirely by AI server demand.
Key Stat: Dell shipped a massive $8.2 Billion in AI servers in the quarter (vs. ~$1.7B in Q1), proving they have fixed their supply chain constraints.
Client Solutions Group (CSG): The PC business remains steady but unspectacular.
Revenue: $12.5B (Up +1% YoY).
Context: The much-anticipated "AI PC refresh cycle" has not yet resulted in a significant revenue spike, showing only modest commercial growth.
The "Lesson Learnt" from Guidance & Market Reaction
Despite the "beat and raise," Dell stock fell ~6% following the report. The key lesson for investors lies in the nuance between "Shipping" vs. "Ordering" and the Margin Mix.
Lesson 1: The "Backlog Burn" Concern
The most critical takeaway from Q2 was the relationship between shipments and new orders.
Shipments: Dell shipped $8.2B of AI servers.
Orders: Dell booked only $5.6B in new AI server orders.
Result: The AI backlog dropped from ~$14.4B to $11.7B.
The Takeaway: For the first time in the AI cycle, Dell burned through its backlog faster than it replenished it. Investors interpreted this as a potential signal that demand might be lumpy or stabilizing, rather than growing exponentially forever. It shifted the narrative from "unlimited demand" to "cyclical demand."
Lesson 2: The "Hollow Revenue" Problem (Margin Dilution)
The guidance and results highlighted a structural issue with AI hardware: it generates huge revenue but lower percentage profits than traditional hardware.
ISG Operating Margins: Fell to 8.8% (down from 11.0% a year ago).
The Reality: Selling a $300,000 AI server with expensive Nvidia chips yields a lower margin percentage than selling proprietary storage or traditional servers.
The Lesson: The market is no longer impressed by revenue growth alone. The guidance for Q3 implied that this margin pressure would persist. Investors learned that AI growth is dilutive to margins in the near term, meaning EPS will not grow as fast as Revenue.
Lesson 3: Guidance Conservatism is Punished in High-Beta Stocks
Dell’s Q3 EPS guidance of roughly $2.45 was seen as merely "in-line" or slightly conservative relative to the massive revenue beat.
Takeaway: When a stock is trading at an elevated valuation based on an AI narrative, "good" guidance isn't enough. The market requires a "beat and drastic raise" to maintain momentum. The Q2 guidance signalled that the second half of the year would see seasonal normalcy rather than an explosive continued ramp.
Final Verdict for Investors
The Q2 report transformed Dell from a "pure growth" AI trade into a "show me the margins" story. The lesson is to watch the Book-to-Bill ratio in the next earnings (Nov 25, 2025). If orders (Bookings) don't exceed Shipments (Billings), the backlog will continue to shrink, likely capping the stock's upside.
Key Metrics Investors Should Watch
While the headline Revenue and EPS are important, Dell is currently trading almost entirely as an "AI Infrastructure" play. The market will look past the consolidated numbers to scrutinize the Infrastructure Solutions Group (ISG).
A. The "Real" Number: AI Server Momentum
This is the single most critical metric. If Dell misses here, the stock will likely fall regardless of other metrics.
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AI Server Revenue: Look for a number exceeding $3.1B - $3.2B (sequentially up from Q2).
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Backlog: In Q2, the AI server backlog was ~$3.8B. Investors want to see this grow or at least stay flat, proving that demand is durable and not just a one-time burst.
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Pipeline: Management commentary on the "5-quarter pipeline" for the PowerEdge XE9680 server (mostly Nvidia-based) is crucial.
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The "Super Micro" Factor: Listen for hints that Dell is capturing market share from Super Micro Computer (SMCI) due to the latter's recent accounting/auditing troubles.
B. Margins vs. Component Costs
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ISG Operating Margin: Last quarter, ISG margins surprised to the upside at ~13.3%. However, analysts are worried about a "memory supercycle" (rising prices for DRAM/NAND) eating into profits.
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The metric to watch: If ISG operating margins dip significantly below 11-12%, it signals that Dell is sacrificing profitability to win AI market share—a negative signal for the stock.
C. Client Solutions Group (CSG) – The PC Refresh
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Commercial PC Revenue: The market has been waiting for the "Win11 Refresh Cycle" for a year. It hasn't fully materialized yet.
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Expectation: Modest growth (mid-single digits). If Dell guides for a strong pickup in PC demand for Calendar 2026, it adds a second engine of growth to the AI story.
D. Headline Estimates (Consensus)
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Revenue: ~$27.27 Billion
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Non-GAAP EPS: ~$2.48
Dell Technologies (DELL) Price Target
Based on 23 analysts from Tiger Brokers app offering 12 month price targets for Dell Technologies in the last 3 months. The average price target is $159.28 with a high forecast of $186.00 and a low forecast of $110.00. The average price target represents a 30.01% change from the last price of $122.51.
Trading Opportunity: Post-Earnings Scenarios
The stock's recent decline into the mid-$110s/$120s suggests that a lot of bad news (margin fears) is already priced in. This is often a contrarian bullish setup.
Scenario A: The "Relief Rally" (Bullish)
Trigger: Dell reports an AI backlog beat (> $4B) AND maintains ISG margins above 12%.
Price Action: Because the stock is oversold, a "solid" (even if not perfect) report could trigger a sharp relief rally.
Target: A move back toward the $130 - $135 resistance zone.
Why: The market fears that AI margins are collapsing. Disproving this specific fear is the catalyst.
Scenario B: The "Margin Crunch" (Bearish)
Trigger: Revenue beats, but EPS misses or barely meets due to lower margins (e.g., ISG margins drop to <11%).
Price Action: The market will punish "profitless growth."
Target: A test of the psychological $100 level or the technical support around $108.
Short-Term Trading Strategy Notes
Implied Volatility (IV): IV is likely high (~9-10% move priced in). Buying straight calls or puts is expensive and risky due to "IV Crush" after the event.
Key Levels:
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Support: $118 (Recent technical floor) and $108 (Stronger structural support).
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Resistance: $132 (50-day moving average area).
Bottom Line
The trade here is about margins, not just revenue. If you are looking to trade long, wait for the headline numbers. If ISG margins held up, the dip is likely a buying opportunity. If margins cracked, stand aside as the stock searches for a lower floor around $100.
Technical Analysis - Exponential Moving Average (EMA)
We have seen how DELL have been affected by the broad market pullback last week, though DELL is trying to get back up above the 200-day period, but the growing concerns over the possibility of an AI bubbles seem to override any positive sentiment.
So I feel that DELL earnings might be a good opportunity to see if there is sign of AI bubbles, when demand for AI server really fall to its lowest and could this trigger a possible rebound for the tech stocks?
I think investors should focus on DELL ISG Margins and Backlog momentum.
Summary
Dell’s Q3 earnings setup is defined by a clash between AI revenue growth and profitability fears. The stock has pulled back recently, creating a potential "oversold" opportunity if margins hold up.
Key Metrics to Watch
AI Server Backlog (The "Real" Number):
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In Q2, Dell "burned" backlog (shipping $8.2B while booking only $5.6B in new orders), dropping the total backlog to $11.7B.
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The Test: Investors need to see the Book-to-Bill ratio return to >1.0. If the backlog shrinks again, it signals demand is cooling or lumpy.
ISG Margins (The Profit Check):
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Selling AI servers is expensive. In Q2, Infrastructure (ISG) margins fell to 8.8%.
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The Bar: If margins dip below ~11%, the market will punish "profitless growth." If margins stabilize above 12%, the stock likely rallies.
Client Solutions (PC Refresh):
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Expect modest growth. Any guidance hinting at a Calendar 2026 "Windows 11 refresh" acceleration adds a bullish tailwind.
Trading Opportunity
Bull Case (Relief Rally): The bar is low. If ISG margins beat 11% and backlog stabilizes, the stock could snap back toward $130+ as fear evaporates.
Bear Case: If backlog drops significantly (<$11B) or margins compress further, support at $108 is the next major floor.
Bottom Line: Ignore the headline revenue beat. Focus entirely on ISG Margins and Backlog momentum.
Appreciate if you could share your thoughts in the comment section whether you think DELL could provide a significant performance on its ISG Margins and also show that the backlog momentum is going strong, this might help to create a rebound for the tech stocks.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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