Dell Technologies Inc (NASDAQ:DELL) shares fell after the company posted record second quarter results but reported margin pressure and issued adjusted earnings guidance below Wall Street expectations.
For the fiscal second quarter ended August 2, 2025, Dell reported revenue of $29.8 billion, up 19% from a year earlier, and adjusted earnings per share of $2.32, a 19% increase.
Results were driven by strong demand for artificial intelligence servers, with $8.2 billion shipped during the quarter and an AI server backlog of $11.7 billion.
Dell’s Infrastructure Solutions Group, which includes servers and networking, reported record revenue of $16.8 billion, a 44% year-over-year increase.
Client Solutions Group revenue, which covers PCs, rose 1% to $12.5 billion.
However, investor sentiment turned cautious as Dell’s adjusted gross margin declined to 18.7%, down from about 22.4% a year ago, reflecting the ramp-up of lower-margin AI server production.
The company also forecast third quarter adjusted earnings per share of $2.45, below analyst expectations of $2.55.
In addition, the AI server backlog declined compared with the prior quarter, raising questions about the pace of future demand.
Despite these concerns, Dell raised its full-year fiscal 2026 revenue forecast to a range of $105 billion to $109 billion, compared with its prior range of $101 billion to $105 billion.
It also lifted its full-year adjusted earnings per share guidance to $9.55 at the midpoint, up 17% from last year.
The company said it now expects to ship $20 billion worth of AI servers in fiscal 2026, double the level of the previous year.
“In Q2, we achieved strong top-line results and profitability, reaching record revenue of $29.8 billion,” Dell chief financial officer Yvonne McGill said.
“We delivered another quarter of robust cash generation, with $2.5 billion in cash flow from operations and $1.3 billion in shareholder returns.”
Shares of Dell fell 9% to $122 late morning on Friday.