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DATE

Thursday, May 28, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Vice Chairman and Chief Operating Officer — Jeffrey W. Clarke
• Chief Financial Officer — David Kennedy
• Head of Investor Relations — Paul Frantz

TAKEAWAYS

• Total Revenue -- $43.8 billion, up 88%, marking a record result and reflecting greater-than-expected demand across all lines of business.
• Diluted EPS -- $4.86, up 214%, reaching an all-time high.
• ISG Revenue -- $29 billion, up 181%, with nine consecutive quarters of double-digit or better growth.
• AI Server Revenue -- $16.1 billion recognized, with $24.4 billion in orders booked and $51.3 billion backlog reported.
• Traditional Server and Networking Revenue -- $8.5 billion, up 92%, with demand outpacing supply in all regions.
• Storage Revenue -- $4.3 billion, up 8%, supported by continued growth in Dell IP storage, with unstructured storage showing double-digit growth for the last two quarters.
• CSG Revenue -- $14.6 billion, up 17%, including commercial revenue of $13 billion (up 18%) and consumer revenue of $1.6 billion (up 9%).
• Operating Income -- $4.2 billion, up 154%, representing 9.7% of revenue, with margins driven by all major business segments.
• Gross Margin Dollars -- $7.9 billion, up 57%, with gross margin rate at 18.1% due to high AI server mix.
• Operating Expenses -- $3.7 billion, up 9%, with OpEx at 8.4% of revenue, the lowest in over two decades.
• Cash Flow from Operations -- $4.1 billion, a Q1 record, attributed to sequential revenue growth and profitability.
• Shareholder Returns -- $2.1 billion returned, including 11 million shares repurchased at an average $147 per share, and a $0.63 per share dividend paid.
• AI Customer Base -- Over 5,000 AI customers, up more than 50% in six months, spanning Neo Cloud, sovereign, and enterprise categories.
• Fiscal 2027 Revenue Guidance -- Raised to $165 billion to $169 billion, nearly 50% higher at the midpoint compared to the prior year, with AI server revenue guided at $60 billion.
• Guidance for Q2 -- Revenue projected at $44 billion to $45 billion (up approximately 50%), with ISG to grow 75% and CSG about 20%.
• Margin Outlook -- Operating margin rate expected to expand throughout the year, supported by ongoing pricing discipline and product mix improvements.
• Capacity Constraints -- Demand for AI and traditional servers is exceeding supply; primary constraints are memory (DRAM, NAND), CPUs, and, to a lesser extent, hard drives.
• Pipeline Growth -- The deal pipeline is said to be growing at rates higher than historical norms, providing management confidence for a raised revenue guide.
• Supply Commitments -- Customers are pursuing multi-year supply arrangements with Dell, with management citing ongoing negotiations up to five years in duration.

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RISKS

• Management identified that "We are supply constrained in the second half," emphasizing that demand is not the issue—component shortages may limit upside.
• Ongoing "notable commodity constraints, particularly in DRAM and NAND," could impact the ability to fulfill orders despite record backlog.
• Jeffrey W. Clarke outlined, "we are repricing it feels like every day," noting that persistent inflationary pressures in memory, CPUs, and other components could eventually slow customer acquisition or defer purchases.

SUMMARY

The quarter delivered historic financial results, marked by all-time records in revenue, earnings per share, and cash flow. Dell Technologies (DELL +4.81%) reported AI and traditional server demand outstripping available supply, with order and backlog levels at new highs and management raising full-year guidance by approximately $27 billion in revenue and $5 per share in EPS. The company's pivot to high-value AI infrastructure was complemented by robust growth in storage and PC refresh cycles, and management stressed that customers’ willingness to commit to multi-year supply agreements supports the sustainability of demand. The company communicated that broader AI deployment is driving increased storage attachment and higher-margin services, with product innovation and expanded Dell IP cited as margin drivers. Multi-quarter and multi-year pipelines in both AI and traditional infrastructure segments provide further visibility, though further growth may depend on Dell's ability to overcome continuing memory and processor shortages.

• Direct quote: Kennedy stated, our pipeline over the next 5 quarters, that is multiples of our backlog, and it is growing across each individual vertical
• Clarke explained, agentic AI is driving a new marketplace for traditional servers that we have not seen before. indicating incremental use cases for existing product lines.
• Financing activity is rising, with double-digit origination growth reported across all segments as customers leverage Dell Financial Services to secure IT assets ahead of further price increases.
• Dell is expanding its AI ecosystem through partnerships with NVIDIA, Google Cloud, OpenAI, SpaceX AI, and others to facilitate AI adoption across geographies and verticals.
• Clarke said, Another way to describe this is the premium for computational capability, whether that be on the edge with a PC, smartphone, servers running this harness, GPUs doing magical, wonderful work creating all of this great value just continues to grow at a rate we have never seen. signaling ongoing TAM expansion.

INDUSTRY GLOSSARY

• Agentic AI: AI systems capable of operating independently to perform complex tasks, making autonomous decisions within workflows, as referenced in Dell's context of driving new traditional server demand.
• Dell IP Storage: Proprietary storage solutions engineered, owned, and maintained by Dell, as opposed to third-party or OEM partner offerings.
• Neo Cloud: Dell's designation for next-generation cloud infrastructure providers targeted for AI and high-performance workload solutions.

Full Conference Call Transcript

Paul Frantz: Thanks, everyone, for joining us. With me today are Jeffrey W. Clarke, David Kennedy and Tyler Johnson. Our earnings materials are available on our IR website and I encourage you to review these materials. Also, please take some time to review the presentation, which includes additional content to complement our discussion this afternoon. During this call, unless otherwise indicated, all references to financial measures refer to non GAAP financial measures including non GAAP gross margin, operating expenses, operating income, net income, diluted earnings per share, free cash flow, and adjusted free cash flow. A reconciliation of these measures to their most directly comparable GAAP measures can be found in our web deck and our press release.

Growth percentages refer to year over year change unless otherwise specified. Statements made during this call relate to future results and events are forward looking statements. Based on current expectations. Actual results and events could differ materially from those projected due to a number of risks and uncertainties, are discussed in our web deck and our SEC filings. We assume no obligation to update our forward looking statements. Now I will turn it over to Jeffrey.

Jeffrey W. Clarke: Thanks, Paul, and thanks, everyone, for joining us. What a great start to FY 2027. The first quarter underscored the strength and agility of our operating model and the advantage of our broad portfolio. Our team executed very well in a challenging environment delivering record revenue and EPS. Revenue was $43.8 billion, up 88% and earnings per share was $4.86 up 214%. Demand was stronger than we anticipated. Across all lines of business and geographies with customers moving to secure supply across a broad range of IT needs. This drove meaningful scale, record cash generation, and continued strong capital returns for shareholders.

Our strong performance reflects not only demand in the quarter, but also the pace of innovation we continue to bring to market across the full stack of PCs, compute and storage. We have had a strong run of announcements since our last call. At GTC, we marked the 2-year anniversary of the Dell AI factory with NVIDIA and extended our leadership in accelerated computing. We introduced new infrastructure across NVIDIA's Vera Rubin Rack Scale platform, the Rubin GPU architecture, and RTX GPUs. With form factors that scale the AI factory from the largest clusters in the world to the flexibility and efficiencies enterprises need. Also extended AI to the desktop with the new Dell Promax systems.

Supporting the GB10 and introducing the industry's first OEM desktop with GB300. At Dell Technologies World, we built on that momentum with new desk side server storage and data management innovations. Our desk-side agentic AI solutions help enterprises run production ready AI locally, supporting use cases like coding, research, and secure private assistance while keeping sensitive data and IP on prem. Building on strong demand for our integrated rack scale systems where Dell is the top rack scale infrastructure provider, we expanded the portfolio with the launch of Dell Power Rack. A turnkey factory integrated solution designed to accelerate deployment across compute, networking, and storage.

In servers, our 18th generation of PowerEdge server portfolio expands support for AI, HPC, and enterprise workloads. With new air cooled systems that improve compute density and efficiency. On the data side, advancements in the Dell AI data platform help customers make enterprise data ready at scale with stronger orchestration, faster indexing of unstructured data, and improved analytics performance. We further strengthened the storage foundation for modern and AI workloads, PowerStore Elite delivers up to 3x performance and densities of prior generations with an industry leading 6-to-1 data reduction guarantee. Object scales adds higher density object storage and PowerFlex extends our exascale storage architecture with a unified approach across block, file, and object workloads.

We continue to expand the Dell AI factory ecosystem with partners including NVIDIA, Google Cloud, OpenAI, SpaceX AI, ServiceNow, Palantir, Mistral, and CrowdStrike. For example, with Google Distributed Cloud, we are bringing Gemini models on premises with confidential compute so customers can run AI closer to the data while meeting data residency, privacy, and sovereignty requirements. The bottom line, Dell is expanding the AI factory from the data center to the desk side across compute, storage, networking, software, and services. We are giving customers choice helping them protect their data, and enabling them to move from pilots to production faster. With that context, let me walk you through what we are seeing in the business.

Our Q1 results and AI, the opportunity remains exceptionally strong, underscored by durable, broad based demand. In Q1, we booked $24.4 billion in AI orders and recognized $16.1 billion of AI server revenue. We exited the quarter with a record $51.3 billion of AI backlog and our pipeline continued to grow sequentially and remains multiples of our backlog. Even after converting $24.4 billion into orders. Demand continues to exceed supply, with memory as the primary constraint, and we expect to exit the year with meaningful backlog. Our customer count surpassed 5 thousand with growth across Neo Cloud, sovereigns, and enterprise customers. Our differentiated offering continues to resonate, and our expanding platforms and capabilities are supporting continued share gain.

We believe those share gains are rooted in things that have long differentiated Dell, strong engineering and design, ability to deploy and install at scale, ongoing services and support, and flexibility financing and consumption options. In AI, those advantages matter even more. Customers are not just buying components. They are looking for integrated solutions they can put into production quickly on infrastructure they control with the performance, security, and data foundation their workloads require. Moving to traditional servers. Revenue is up 92% as demand remained well ahead of supply in Q1 with strength across every region. The majority of demand was driven by large enterprise customers refreshing their compute environments and expanding capacities to support growing workloads.

For many large customers, ensuring compute availability to modernize and grow remains our highest priority. Customers are also increasingly focused on infrastructure density, as they optimize both spend and data center space which is driving demand and platforms that deliver more compute capacity, greater efficiency, and better consolidation within existing footprints. Additionally, we saw AI inference workloads driving incremental demand for traditional compute. The majority of the installed base remains on 14th generation or older servers reflecting the continued refresh opportunity going forward. The memory uncertainty is driving customers to proactively secure access to infrastructure across both traditional and AI workloads over longer periods of time. We also continued to execute the pricing and margin discipline we established in Q4.

All in, we remain confident in the demand outlook for traditional servers, and our portfolio is well positioned to capture that opportunity. Turning to storage. Revenue was up 8% driven by continued outperformance in our Dell IP portfolio. Dell IP delivered a record demand growth quarter making our fifth consecutive quarter of demand growth above market. In primary storage, we saw notable strength in PowerMax and PowerStore. We continue to see momentum in the mid range ecosystem, with PowerStore delivering its eighth consecutive quarter of double digit demand growth. And unstructured, we saw strong performance from power scale and object scale, with 3 consecutive quarters of growth, including double digit in each of the last 2 quarters.

Dell IP storage continues to become a larger mix of Dell storage, with its higher margins. And as a result, storage delivered strong profitability and was a key driver of overall ISG profitability in Q1. Turning to CSG. Revenue grew 17%, and we gained share for the second consecutive quarter with broad based demand led by large enterprise customers. Commercial revenue grew 18%, our seventh consecutive quarter of growth with demand up for the ninth consecutive quarter. Large enterprise customers continue to refresh with double digit growth across all regions, We continue to see run rate in the refresh cycle with roughly 1/3 of the installed base consisting of devices 4 years or older.

Consumer revenue was up 9%, our third consecutive quarter of demand growth supported by continued strength in gaming. Overall, CSG profitability improved as better expected demand drove higher attach greater scale along with improved consumer profitability. In closing, Q1 was a strong start to FY 2027 and another proof point in the power of our operating model. We delivered record revenue, EPS, and cash flow and continued returning capital to shareholders. While executing with discipline in a challenging demand and supply environment with notable commodity constraints, particularly in DRAM and NAND. Customers have come to rely on Dell during periods of significant disruption and we expect that to continue over the course of the year.

Our customers are investing in AI infrastructure, modernizing compute, expanding storage, and refreshing PCs to support the next wave of workloads. We are well positioned with our portfolio. I am proud of the team's execution and confident in our ability to create long term value for customers and shareholders. With that, let me turn it over to David to walk through the financials and our outlook.

David Kennedy: Thanks, Jeffrey. We delivered a record first quarter, which positions us very well for the year. Execution was strong across the business, from supply chain to sales to pricing, driving record revenue EPS and cash flow along with continued strong shareholder returns. Total revenue was up 88% to $43.8 billion. Gross margin dollars grew 57% to $7.9 billion. Gross margin rate was 18.1% driven primarily by mix shift to AI servers with AI revenue up nearly 9x year over year. Excluding the impact of AI mix, gross margin rate was up. Operating expenses were up 9% to $3.7 billion primarily from variable compensation tied to our outperformance.

Importantly, we drove meaningful scale in the P&L, with OpEx down 610 basis points to 8.4% of revenue, the lowest level in over 20 years. Operating income grew 154% to $4.2 billion, or 9.7% of revenue. Driven by higher revenue and resilient margins across traditional servers, storage, and CSG. Net income was up 194% to $3.2 billion, primarily driven by strong operating income. Diluted EPS increased 214% to $4.86 a record. Moving to ISG. ISG revenue was a record $29 billion up 181%, marking 9 consecutive quarters of double digit or better revenue growth. AI server momentum remained very strong. In the quarter, we generated $24.4 billion in orders, $16.1 billion in revenue, and an ending backlog of $51.3 billion.

Traditional server and networking revenue was $8.5 billion, up 92% and demand continues to outpace supply. Storage revenue was $4.3 billion, up 8% with strong demand across the Dell IP portfolio. Execution across the Dell IP portfolio was strong, with another quarter of growth above the market. Unstructured Solutions were the fastest growing along with strong demand across primary storage. ISG operating income was a record $3.1 billion, up 206% marking 8 consecutive quarters of double digit or better growth primarily driven by higher revenue across the business. Operating margin was 10.5%, up 80 basis points even as AI servers grew nearly 800% year over year.

Looking at the key drivers of margin performance, storage profitability was up with a higher mix of Dell IP and rate expansion within the solutions. Traditional server margins remained stable despite a high inflationary environment. AI server profitability was in line with our mid single digit operating income rate target. Taken together, these factors, along with stronger than expected revenue, drove meaningful scale in the P&L.

Jeffrey W. Clarke: Turning to CSG. CSG revenue was up 17% to $14.6 billion. Commercial revenue grew for the seventh consecutive quarter up 18% to $13 billion, while consumer revenue increased 9% to $1.6 billion. CSG operating income was $1.2 billion, or 8% of revenue. This performance was driven by stronger commercial revenue and mix, which supported more higher-margin peripherals, And similar to ISG, this all drove meaningful scale in the P&L. Looking ahead, we will continue to balance customer demand with supply while driving scale across the business. Moving to cash and the balance sheet.

David Kennedy: We delivered a Q1 record cash quarter with cash flow from operations of $4.1 billion. This was primarily driven by sequential revenue growth and higher profitability. We ended the quarter with $14.1 billion in cash and investments, up $800 million sequentially. Our core leverage ratio is at 1.2x. We returned $2.1 billion to shareholders this quarter, including repurchasing 11 million shares at an average price of $147 per share and paying a dividend of approximately $0.63 per share. Repurchase activity remains strong, and we remain committed to our shareholder return framework. Turning to guidance. Customers continue to prioritize their IT infrastructure needs with an increased focus on securing supply, We expect that behavior to continue throughout the year.

For Q2, our revenue outlook is similar to Q1's performance. At the same time, we have increased our expectations for the second half, maintaining an appropriate level of prudence given that we are only 90 days into the fiscal year. From a profitability standpoint, the pricing discipline and margin stability we saw in Q4 and Q1 continue to hold. Excluding the impact of AI mix, our gross margin outlook is better than it was 90 days ago. And we continue to expect margin rate expansion through the balance of the year. For Q2, we expect revenue of $44 billion to $45 billion up roughly 50% at the midpoint of $44.5 billion.

ISG is expected to grow roughly 75% supported by $15.5 billion in AI server revenue, and CSG is expected to be up roughly 20%. Operating expenses are expected to be down low single digits sequentially. Operating income is expected to grow roughly 80%. We expect sequential improvement in ISG operating income rate while CSG operating income rate moderates to roughly 6% as we balance demand share and profitability. We anticipate a diluted share count of roughly 652 million shares. Diluted non GAAP earnings per share is expected to be $4.80 plus or minus $0.10 up over 100% at the midpoint.

For the full year, we expect revenue of $165 billion to $169 billion, up nearly 50% at the midpoint of $167 billion. ISG is expected to grow roughly 80% driven by $60 billion of AI server revenue at the midpoint. Or approximately 2.4x year over year. Traditional servers are expected to grow just over 60% storage up mid single digits, and CSG to grow low teens. We continue to prioritize margin rate expansion. Excluding the impact of AI mix, our gross margin outlook is higher than it was 90 days ago, and remains up year over year. We expect operating expense dollars to be up high single digits. Driven primarily by variable compensation.

At the same time, our modernization efforts are paying off, simplifying, standardizing, automating and enhancing our operating model with AI delivering significant operating leverage with OpEx as a percentage of revenue in the single digits. Operating income is expected to grow over 55%. With improvement both in dollars and as a percentage of revenue. I&O is expected to be between $1.4 billion and $1.5 billion Diluted non GAAP earnings per share is expected to be $17.90 plus or minus $0.25 up roughly 75% at the midpoint. In closing, we delivered an exceptional first quarter with record performance across revenue, EPS and cash flow. Revenue was $43.8 billion, up 88%. EPS grew 214% to $4.86.

We generated $4.1 billion in cash, and returned $2.1 billion to shareholders. The strength of the quarter reflects broad based execution across the business continued momentum in AI, and solid performance across the rest of the business. Our portfolio and operating model continue to differentiate us in a dynamic supply environment and we remain focused on supporting customers while driving shareholder value. We are well positioned for the year. Thank you to the team for their strong execution and thank you all for your time. Now I will turn it back to Paul to begin Q&A.

Paul Frantz: So let's get to Q&A. In order to ensure we get to as many of you as possible, please ask 1 concise question. Let's go to the first question.

Operator: Thank you. We will take our first question with Ben Reitzes with Melius Research.

Analyst (Ben Reitzes): Well, let me say congratulations, guys. I do not think I have ever seen a Dell quarter like this. Maybe Michael had 1 in the dorm room or something beating expectations. But congrats to you guys. The question that I have is with regard to the inherent level of real demand. When you see something like this, you think there could be some pull forward, especially in the traditional servers and the PCs. But the way you guided for the year, obviously, by taking up the second half, would imply that the pull forward does not have much of an impact stealing from the rest of the year.

Can you just go through the puts and takes of the pull forwards in the major segments, please? And how you came up with still a higher second half?

Jeffrey W. Clarke: Thanks. Sure and thank you, Ben. It was a good quarter. Been here a long time. it is a good quarter. And when we look at the demand environment that we are operating in today, it is very different than historical. We think of it as several factors that are driving demand. Clearly what you said, there is a pull in component, there is a buy ahead, Customers want to ensure they have access to supply. They are concerned about raising prices, and they are acting. there is also a component of we have large install bases.

Whether that be in PCs where you have 1/3 of the units that are 4 years or older, were lagging in a Windows 11 refresh and caught up through the quarter. Against historical refreshes. And we have a large number of 14G servers in the base that need to be upgraded as customers are moving to modernize. Customers are upgrading their edge. They are upgrading the infrastructure. They are looking for more capable PCs as agentic workloads, make their way to the edge. They are looking to consolidate space, power, and cooling to drive efficiency. Our new 18G servers are a great vehicle to do that with its 13-to-1 consolidation.

And we have we are seeing pockets of fundamental new demand. there is new demand driven by AI. there is an AI drag. there is inference. And the agentic AI is driving a new marketplace for traditional servers that we have not seen before. And then I think the last 2 are, which you would expect out of Dell, are we are winning. We are taking share in all 3 segments, 4 if I count AI servers. So all 4 major businesses PC, server, storage, AI servers, taking share, we are winning.

And then lastly, during these times of supply disruption, and a lot of puts and takes in the marketplace, customers tend to come to Dell to look for a calming hand looking for help. And we are certainly helping as many customers as we have. that is in PCs, that is in servers, that is in storage. So those are the demand levers of the demand dynamics that we see across all of the businesses. As we look at our forward looking pipelines, the pipelines have never been healthier. They are actually growing at greater than historical rates, which gave us confidence to raise the guide by $27 billion of revenue for the year. I hope that helps.

Paul Frantz: Thanks, Ben. Thanks, Jeffrey.

Operator: And the next question will come from Mark Newman with Bernstein.

Analyst (Mark Newman): Congrats on a great quarter. Would be great to get a bit more clarity on the breakout of growth between units and pricing, particularly for the low out performance you had on traditional servers. And just like adding to some of the stuff you said in previous question, just trying to get a better sense for how much confidence you have that this is sustainable beyond just 1 or 2 quarters, but through this year and into next year? Thanks so much, and congrats again.

Jeffrey W. Clarke: Thanks, Mark. Very specifically, we grew units in PCs. The last reported quarter, we grew units in consumer PCs. And commercial PCs and obviously the aggregate market. We took share. So there is a baseline of growth there. We were already the industry leader in PC revenue. And clearly, the inflationary environment has driven up prices. And where we saw that primarily is on high price band products. And we were the market leader in high price banded PCs. And that expanded as prices moved up. I will not parse out the specifics, but we had a great growth quarter in units. Obviously, the inflationary environment We had the execution towards, for example, high end in gaming and consumer.

We had high price bands in commercial PCs. And do not forget the attached business. The attached business for us around peripherals and around services is very healthy when the base business grows, it drags more revenue with each and every unit. On servers, absolute server unit growth occurred. They will probably kick me under the table here. We had significant unit growth in traditional servers. And then we had the content growth. We are continuing to see on a year over year basis more cores, more DRAM, more NAND placed in each and every server. So you have the uplift of more content, and then, obviously, that content is growing as well. In terms of the inflationary side.

So absolute growth in units absolute growth in the content driven by modernization and consolidation of as customers are looking to upgrade and modernize their fleets, and then we have the inflationary part. The other part of servers that I think is important to call out is this notion of AI drag. And seeing traditional servers move and take on AI workloads. Those AI workloads we are seeing with very dense servers making their way into the Neo Clouds, into some of the more advanced inter users, think semiconductor companies, big tech, that are using it to actually drive some of the inference workloads and agentic workloads inside their environment. So that is how you capture it. Thanks very much.

Paul Frantz: We would appreciate it. You are welcome.

Operator: And the next question will come from Amit Daryanani with Evercore.

Analyst (Amit Daryanani): Thanks a lot for taking my question. Congrats on a really nice set of numbers over here. From my side as well. You folks talked about maintaining an appropriate prudence, I think, is the way you framed it, maintaining appropriate prudence when it comes to your guide despite raising the back half outlook. If I sort of think about H2 versus H1 math for a second, right, I think the guide implies 48% of revenues this year will come in the back half of the year. He Historically, that number has been around 52%.

You just touch on how much of that H2 drop you are expecting right now versus historically it is from a pull in versus you folks that perhaps just being a bit more conservative? And you know, is that conservative conservativeness coming more from lack of component availability, or where could that lever be? Thank you.

Jeffrey W. Clarke: You bet, Ahmed. I am gonna lead, and David's gonna punch the answer home. But I am the problem. We have a supply issue. We are supply constrained in the second half. It is not a demand issue for us. Yeah.

David Kennedy: I mean, that is the story here. The demand continues to outpace the supply. That demand is fraud based, as Jeffrey said, so it is going beyond the GPU and there is more AI opportunities from a CPU perspective, traditional server, you know, in the PC, We continue obviously, these are complex designs. And as we go forward, we will continue with operational execution to work with our supply chain teams, our go to market teams and our product teams really execute and match up to the best execution wise the supply that we have with the demand shaping that we see, the teams have obviously executed that tremendously in Q1.

We will look to do the same as we head into the back half of the year. But the demand is there. As Jeff said, that is what we are looking at. We will continue to look for more supply. We would like more supply. But the team will continue to go execute and go chase the pipeline that Jeffrey referenced earlier, which continues to be in very healthy shape.

Paul Frantz: Thanks, Amit. Thank you.

Operator: And we will take a question from Wamsi Mohan with Bank of America.

Analyst (Wamsi Mohan): Yes. Thank you so much. Very, very impressive of results here. I guess if we think about the comment you made on the call, I think you said customers are a priority prioritizing securing supply, and that is something that you expect will continue for the remainder of the year. In this kind of an environment, where you just noted that demand is extremely strong, what is your take on the magnitude of the variation in IT budgets, for this year And do you think that some of this is coming out of the budget for next year as well on the enterprise side?

And I am also curious on the traditional servers, I think, Jeffrey, you mentioned how agentic AI is maybe changing the usage Is there a materiality of those to tier 2 CSPs as well? You noted enterprise rank, but kind of curious if tier 2 CSPs could be a potential offset to maybe any CSPs change in linearity of demand at enterprise.

Jeffrey W. Clarke: Thank you. I mean, Wamsi, I cannot speak to next year and budgets for customers. I mean, clearly, the longer term conversations we are having with customers are multiyear in nature. Of how they secure supply to provide their growth and upgrade their infrastructure and the discussions are multiyear in nature. Think 3, 4, 5 years. Those discussions are underway And it really is about access to supply because quite honestly, I cannot tell them what the price is gonna be. But it is a arrangement and agreements that we are working with large customers to ensure they have what they need to grow their businesses. And we saw that occur across some of the largest enterprises around the world.

And our pipelines indicate that is going to continue with the next set of customers and the next set of customers before that, which is breaking the historical norms of pipeline build within the quarter and the out quarters. Our pipelines are good 2 quarters out. And what was really interesting about traditional servers as an example is we saw the pipeline grow in quarter greater than historical norms. And we saw the 2 quarters out pipelines grow And it is showing more customers looking to get access to the technology. We are seeing budge budgets grow. We are seeing budget shift. Obviously, we are 1 quarter into the year. We will see how the second half plays out.

I think that is part of the prudence that we are trying to convey of the demand signal. But the demand that we see continues to be robust. And we in the supply chain have to go find more parts for the businesses and for our customers to fulfill that demand. I hope that helps.

David Kennedy: I would add maybe a couple of things, Jeffrey. I think as we talk about demand outpacing supply in that environment, you know, we would expect to exit the year with meaningful backlog as we enter next year. So I think that is an important point. The other piece would be from our financing and DFS element, which, again, is a competitive advantage for us. We are engaged with many customers who in normal course of business, would not need to take advantage of financing offerings. But the opportunity to partially use our facility to get as much gear in their environments in year to manage their potential budget issues. Is a great way to balance that.

And we are seeing double digit origination growth across our CSG business, our traditional server business, our storage business. As well as AI, which you would expect. So we are seeing different ways we can help our customers get as much technology into their environments as quick as we can.

Paul Frantz: Thank you so much. Thanks, Wamsi.

Operator: And the next question will come from Catherine Murphy with Goldman Sachs.

Analyst: Thank you for the question. I was wondering if you could further talk to the raised full year guidance for AI servers, $60 billion, and where across your customer base, the 5 thousand customers you mentioned, you are seeing that $10 billion of incremental opportunity for the fiscal year? And as a follow-up, how much capacity can you support in the AI server space with your current manufacturing partners? Thank you very much.

David Kennedy: Yes. Look, a strong start to the year, Catherine, $16.1 billion of shipments, $24.4 billion of orders. Our backlog now sits at $51.3 billion Just 90 days into the quarter, we are raising our full year guide by $10 billion. We will continue to work through those deployments. As we match up our supply Obviously, are complex designs that we are engaged on. We are actively involved in the technology transition as we get ready for Blackwell.

And, obviously, working with all these customer bases in relation to data center readiness and making sure they can receive the product I guess as you look at our portfolio, look, it is expanding and growing across all our verticals, whether that is neo clouds, our sovereign relationships, our enterprise customers, You would have heard Michael last week at Dell Tech World talk about our 5 thousand+ customers, which is up over 50% in the last 6 months, so you can see the traction. that is coming.

And I guess the other data point I would add is as we look at our pipeline over the next 5 quarters, that is multiples of our backlog, and it is growing across each individual vertical there, again, across Neo Clouds individually sovereign individually, and the enterprise space. So it is broad based, and it is present either geography wise or vertical wise.

Jeffrey W. Clarke: No incapacity. Yeah. I mean, we have the capacity to Well, there is there is no capacity issue. it is parts. it is parts. Supply. Supply.

Paul Frantz: Thanks, Pam. Thank you.

Operator: And the next question will come from Samik Chatterjee with JPMorgan.

Analyst (Samik Chatterjee): Hi. Thanks for taking my question and congrats from my side as well on the strong results here. I would like just to focus on 1 specific comment that you made in your prepared remarks where the gross margin outlook for the year ex AI is better than you, had 90 days ago. If you can just flesh that out a bit more in terms of that a function of price increases that you have been able to take, or is that a function of the kind of sort of mix of products that you are now selling or where customer demand is focused relative to what you envision 90 days ago?

Just curious to hear what is driving that better outlook there. Thank you.

David Kennedy: Yeah. Sure, Samik. I think it starts with our Dell IP storage portfolio. We have taken up our revenue guide not only for Q2 but also for the back half of the year. We are seeing our Dell IP portfolio resonate in the marketplace. Whether that is the unstructured product, from a power source perspective in the midrange, All of that obviously drives from a Dell IP mix perspective. Tailwinds from a margin perspective and a rate perspective. And the other elements of the business, both CSG and traditional server, made the commitment to make sure we sustain our margin rates. We see a path to that. We will continue to manage that as we see the growth.

And you put that basket of goods together from a core business perspective, and you see the lift in the overall margin rate as a result.

Paul Frantz: Thanks, Samik. Thank you.

Operator: And we will take a question from Maya Merchant with Citigroup.

Analyst: Great. I will add my congrats here too. Thank you for taking my question. If we could just talk a little bit about the attach rates that you are seeing for the AI server, especially as you are talking about greater enterprise demand here. You talked about 5 thousand customers now that is up from where it was a quarter ago. If you could just flesh out how you are seeing that attach rate for storage and services? And is the recent uptick in Dell IP storage a function of attached to AI servers? As well as on services. If you could just comment on that and how that fleshes out into the margin outlook for AI servers.

I think I heard maintaining a mid single digit margin outlook for AI servers. Thank you.

Jeffrey W. Clarke: Sure. A lot's into the question. We will start with the broader topic of we are increasing the amount of storage and services that we are providing AI customers. Period. Michael made reference at Dell Technology World last week with our unstructured data solutions the portfolio of products and how we had won across several major customers, which I think are important. Bellwethers of what is changing in the marketplace. And how our products are being perceived. We are making progress with our AI customers Neo Clouds, Sovereigns, the high frequency traders. Some of the biggest technology companies in the world, semiconductor companies in the world where we are selling more storage.

More Dell IP storage, in fact only Dell IP storage. And you are seeing it in our work, our unstructured portfolio of products had its best quarter in demand. Ever. Unstructured data is the dataset that feeds the beast, so to speak, in AI, and that is where we are seeing the greatest growth and making the most traction. If you think about the portfolio broadly, David mentioned 5 straight quarters of growth of Dell IP. it is 5 in PowerMax. it is 9 in PowerStore. it is 4 in PowerScale. it is 3 in object scale. And our data protection product is 2. We are seeing the entire portfolio gain momentum.

Combination of more competitive products, products designed for the AI era. I would point to Lightning as being an example than AI parallel file system specifically designed for this class of devices and customers. We are seeing increased traction We are certified across NVIDIA stack. Which certainly is driving. We are engineering with them in how to make data ingest and data management and the whole data estate easier for enterprises to adopt. To accelerate their AI needs, And quite frankly, we are in an era where architecture matters more than it ever has. I think of our PowerStore Elite product. We get really excited. We had fun with this last week at Dell Technology World.

And got 3x the performance of its predecessor, 1.5 million IOPS. 6 to 1 data reduction, by 1 petabyte of raw storage stores 6 petabytes of data. I think about it is 70% faster in reads. it is got 4x more throughput. I think about the XScale storage we built purposely for this class of customers. I think about the rack scale architecture that Arthur talked about last week on where we or on stage where we talk about role of storage, networking, compute coming together. Driving more performance. I think about what is happening in the world of data protection or our architecture matters again in 75-to-1 compression rates.

And then ultimately, our fundamental architecture that drives fewer servers and fewer SSDs to store equivalent amounts of information versus our competitors. All of that is being packaged up and presented to our entire customer set and then specifically targeted to our AI customers. Again, whether it is sovereign, whether it is a Neo Cloud or an enterprise, and we are seeing traction. Optimistic, not claiming victory here. We have a lot of work to do. We are committed to the space. If you look at the payload that we delivered at DTW last, it was the biggest and broadest storage payload we have ever brought out at any given time. And there is more to come.

Using AI inside our R&D organizations, we are delivering larger payloads and shorter periods of time, and storage is the primary vehicle to deliver that through. I hope that gives a sense. And obviously, we are still seeing 1 of the differentiators we have in the market marketplace is services, our ability to deploy service product, keep up times greater than anyone else, continues to be a differentiator in the marketplace, and we will continue to invest in that broadly across all customers.

Paul Frantz: Thank you, Oscar.

Operator: And we will take a question from Eric Woodring with Morgan Stanley.

Analyst (Eric Woodring): Hey, guys. A big congrats for me on the quarter. Just an amazing result. I realize we are having a lot of conversations here about sustainability, but I would like to maybe ask you if we could go back to last talk October, and knowing what you know now about the market and incremental agentic and ways that traditional servers are being used perhaps in different ways in your ability to take share from peers. We went back to the October Analyst Day, you know, how would you change that 7% to 9% revenue guide and 15%+ EPS guide? And ultimately trying to get understanding the sustainability of what you are seeing across multiple years.

We realize you might not have numbers, but would just love your thoughts on where maybe that 7-9%, 15%+ would go knowing what you know today. Thank you so much.

David Kennedy: Yeah. I do not think we work a 5 year program on the Q1 earnings call, obviously, as we kind of go through what we will do is obviously validate what we are seeing. We were very keen on the back of Q1 momentum that we see where the growth is real, it is durable, it is accelerating, it is more broad based, it is expanding beyond the GPU.

All of those proof points as they evolve and emerge give us and gave us the confidence not only take up our Q2 guide which pretty much mirror images what we did in Q1, but also look at the second half and build out incremental guidance across every LOB, whether it is PCs, server, storage, and AI. As we do that. Jeffrey touched on earlier we are always pretty confident as we look out over a 2 to 2.5 quarter lens in our pipeline. As we do that. Obviously, dialogue there is as we talk about an AI pipeline over the next 5 quarters.

Building out you know, multiples of our backlog, So all of those, again, indicate that strong reference points of a broader based demand element. And obviously, to that will be the agility for our EPS over time. So, that said, like I said earlier, we will look to drive meaningful backlog as we exit this year And I think that is where we are, Eric, in terms of, you know, looking out any horizon for now.

Jeffrey W. Clarke: Eric, I might add. The following perspective. I do not think applying historical models or historical views about the market and how it is going to act are appropriate today. We are finding new uses. I mean, way that I get asked this or I would ask you this is what is the value of adding intelligence into every workflow every decision, every product, every customer interaction. I would assert the value is pretty darn high. And that is what is been really, I think, the game changer since that October time is what is really in agentic AI. And what you are seeing are new categories of TAM expanding.

You had the 3 microprocessor leaders talk about an expansion of CPU TAMs. Why? it is driven by AgenTic. what is happening in agentic AI? Agentic AI is really the movement of AI from an adviser to an operator. it is actually going to do something now. it is gonna do something meaningful. For it to do something, that agent needs support just like a human needs support. That agent needs support, in this case, of a CPU. You have all of the wonderfulness that a GPU drives, but you have this work that has to be done around IO, around branch, retries, managing state. They are very sequential.

They are very serial in nature as a result of that. that is a workload that is for the CPU. So if you think about this notion is that is generally called a harness. So if you think about that harness, the CPU runs it. it is gonna make those calls. it is gonna manage memory. And it is in the loop in every decision that an agent makes. I We did not know this in October. This is a completely new marketplace. that is being driven by putting intelligence in every workflow and every part of knowledge work on the planet today. And we are just beginning.

Another way to describe this is the premium for computational capability, whether that be on the edge with a PC, smartphone, servers running this harness, GPUs doing magical, wonderful work creating all of this great value just continues to grow at a rate we have never seen. And it is pulling the rest of the ecosystem. that is what we see. And I go for the trifecta here. All of that stuff's got to be stored. It needs high performance storage. To be able to ultimately have a receipt of what the agent is doing so it can be corrected You can understand what it did. that is where we are at.

I do not know how we would have predicted that. In October. And today, I cannot sit here and tell you how big the TAM is other than I know it is bigger. it is growing, and we are in the early innings of it.

Paul Frantz: Fantastic. Amazing, Eric. Thank you.

Operator: And the next question will come from David Vogt with UBS.

Analyst (David Vogt): Great. Thanks guys for taking my questions. And Jeff, appreciate all the detail and David on servers and storage. I want to ask a question on CSG. Obviously, performance taking market share. Can you expand on sort of how you drove profitability both sequentially and year over year? Of going back and thinking through like the best margin I have seen in sort of the PC industry, it was probably not 8%. So just given sort of the drop through, it looks like a 25% drop through how do we think about what is driving that? How much is price? Versus maybe low cost inventory? And how do we think the PC margins trend longer term?

Do we go back to your normal historical long term range that you talked about at the Investor Day? Or just how do we think about kind of where the market is in your competitive positioning from a pricing and margin perspective? Thanks.

Jeffrey W. Clarke: Hey. Look. David and I will tag team this. I think the way to look at this clearly we benefited from tremendous scale in the business. I mean, David made reference that the operating expense as a percent of revenue was down, I believe, 300 basis points on a year over year basis. Actually, a sequential basis. 600. Yeah, 600 on a year over year basis on a sequential basis 300. Well, that is powerful in a business, like the PC business. We also told you in our last earnings call, we were purposely late in making a price move. Because we wanted to build Momentum with volume, we did. We took share in Q4.

In Q1, we purposely moved the price in earlier as we got our to Q2 cost. You know, I think about what we are doing today, you know, we probably move a little too early in retrospect. We saw that temper a little bit of demand in the transactional business things a consumer small and medium business. And we are looking to find the right optimum place for that, which is reflected in our go forward guidance of operating margins for the PC business. I mentioned we had TRU uplift. TRU uplift drives more profit. I mentioned that we had greater peripherals attached and service that drives profitability in the business. that is the package.

We are not operating at COVID margins. Far from it, in fact. If you go back to the operating margins in that era, they were at this range or slightly better. We are benefiting from tremendous scale of the Dell company. A discipline in pricing, that we are working to find the right optimum balance, particularly in that transactionally oriented side of the marketplace, consumer, small and medium business, large deals are done price by deal by deal. And we like what we are doing. We think we have we do not have it perfect yet. Still trying to find the right balance, but I am optimistic.

Operator: And the next question comes from Tim Long with Barclays.

Analyst (Tim Long): Thank you. A 2 parter, if I could, hopefully, both quick on the more traditional enterprise business. First, you talked a lot about storage, Just curious with traditional server guided to 60% for the year and storage mid single digit. Does that mean that, you know, we could see a longer pull through or tail to storage as we look out a little bit further? And then secondly, you guys navigated the, you know, price increases very well. You have touched on that as well.

Just curious in your past history with this, if we do get another uptick that is kind of meaningful and the next several months or quarters, does it get harder to push pricing through another time, or is it you know, similar to the dynamic that you think you have seen over the last quarter or 2? Thank you.

David Kennedy: Tim. I guess a couple of things in there. First, if you look at our guide for the full year, again, I go back to the dynamic that we referenced earlier. When you look at our second half growth in the plan, it is still, if you like, inhibited by the supply that we can get. So the demand is there. The demand is outpacing the supply. That applies to across our ISG business as we look at that. The other element, and I think we have discussed this 90 days ago, as you look at our Dell IP mix in terms of our storage portfolio, We continue to do that crossover with the historical business.

You know, so we get more Dell IP versus third party. You know, by the end of this year, that stops becoming any relevant element of our bridge in relation to that. So, you know, seeing growth in storage on a consistent basis and building that trend is something that excites from a P&L perspective as we move forward. And as we kind of go execute that piece of it.

Jeffrey W. Clarke: On the pricing side, Tim, we are repricing it feels like every day. And I am sure our customers feel that pain. Unfortunately, I do not see that changing given the world that we are living in today where you have an inflation environment, whether it is fuel, whether it is raw materials, whether that is DRAM, whether that is NAND, CPUs, we are living in an inflationary environment that is changing at a rate that obviously we have never seen before. And everything that we see suggests that continues. There will be a point where some customers, it is enough and they will wait it out. And we are seeing that in some cases.

In other cases, we are seeing an acceleration, that notion of the called out earlier where folks are trying to secure that supply now and over multiple years because it is going to be more constrained.

Paul Frantz: Okay. Thank you very much. Thanks, Tim.

Operator: And the next question is from Simon Leopold with Raymond James. Great. Thank you. Appreciate it.

Analyst (Simon Leopold): Wanted to come back to the risks and the supply constraints. I think everybody understands memory at this point. But I would like to get a sense from you as to what other elements or factors are limiting any upside beyond the memory constraint. And I am thinking about things like printed circuit boards, etcetera. Help us understand sort of the rank orders. Appreciate it.

Jeffrey W. Clarke: Sure. Sure, Simon. Yeah. I called out the 3 that we are spending a tremendous amount of time on. Obviously, NAND and DRAM microprocessors, If you went down the list, next, it is likely hard drives. You go down the list beyond that, there is lots of things. If you look at what is happening in the semiconductor network, you are seeing utilization of the trailing nodes beginning to fill at greater rates, leading edge nodes stuff is fully is fully allocated. Lead times are a year. So all of those are pressured, but the most pressure comes across the 4 that I in the first 3 primarily.

DRAM, NAND, CPUs, then hard drives, and then ultimately the basket of goods that sit around that. Our supply chain is clearly worked through this. This is what we do. Never run out of parts. Got a Salesforce that is out selling lots with a demand and pipeline that looks very encouraging that we tried to convey through the call. We have our work cut out for us to work with our partners to drive more supply, and every bit and bite matters. Every microprocessor matters and that is what we all try to do every day.

Paul Frantz: Thanks, Simon.

Operator: We will take 1 more question. We will take our final question from Krish Sankar with TD Cowen.

Analyst (Krish Sankar): Yes. Hi, thanks for taking my question. Jeffrey, again, congrats on amazing results. I just wanted to find out on your servers, is there a way to think about what is the mix of x86 versus Arm? And does it matter to you, or is there any margin differential between those 2 architectures from a Dell standpoint?

Jeffrey W. Clarke: Traditional servers are x 86 today. We are excited about the opportunity with Vera in the future, particularly as we talk about these advanced workloads that drive increasingly more computational need running this harness, the CPU, managing this scaffolding around every GPU call is gonna be more performant. And there will be more choice, more opportunity. We need the relief of microprocessors, so we are excited about that. On the GPU side, if my memory serves me right, it is biased towards ARM. So when you think about the big GB200, B300, obviously, towards Vera. You think about direct liquid cooling, the large deployments. Biased towards ARM.

If you think about enterprise and AIR, so think B200, B300, RTX 6 thousand Pro, you think those are x86.

Paul Frantz: Thanks, Chris. and Jeff, we will turn it over to you for the close.

Jeffrey W. Clarke: Thanks, Paul. And thanks, everyone, for joining us today. Q1 was an exceptional start to FY 2027. Highlighted by strong execution across ISG and CSG, and continued momentum in AI. As we look to Q2 and into the second half, our pipeline indicates demand is not slowing, but accelerating. And meaningfully outpacing supply as customers prioritize securing the infrastructure they need across AI, traditional compute, storage, and PCs. Reflecting that strength, we raised our FY27 revenue and EPS guidance by approximately $27 billion and $5, respectively. We are operating with discipline in a challenging supply environment, scaling the business and continuing to return capital to shareholders.

We feel very good about our position, our momentum, and our ability to create long term value. Thanks again for joining us today.

Operator: And this concludes today's conference call. We appreciate your participation. You may disconnect at this time.