Dell Technologies posted $47.0 billion in fiscal second-quarter 2027 revenue, up 58% year over year, as AI server orders reached $60.9 billion and the backlog climbed to $95.0 billion. The company raised its full-year outlook, but free cash flow fell 47% to $986 million as inventory and financing receivables grew.
Dell Technologies Inc. (NYSE: DELL) reported $47.0 billion in fiscal second-quarter 2027 revenue, up 58% year over year. AI server orders reached $60.9 billion, while the ending AI server backlog hit $95.0 billion.
Orders run ahead of recognized revenue
Recognized AI server revenue totaled $16.4 billion for the quarter, far below the order and backlog figures. Orders measure booked demand, and backlog represents orders still awaiting conversion. The backlog provides substantial revenue visibility, although Dell did not disclose its conversion schedule.
Outlook rises as cash flow slips
Dell raised its fiscal 2027 revenue outlook by $25 billion to $192 billion and increased expected AI-optimized server revenue from $60 billion to $74 billion. Operating cash flow, however, decreased 13% to $2.225 billion, even as first-half operating cash flow increased 18% to $6.306 billion.
Free cash flow declined 47% to $986 million, derived from $2.225 billion of operating cash flow minus $1.239 billion of capital expenditures and capitalized software costs, net of asset-sale proceeds. Adjusted free cash flow reached $8.149 billion once Dell added back the $6.667 billion operating-cash-flow impact from financing-receivables changes and a $496 million net impact tied to leased equipment.
Infrastructure segment strengthens
Infrastructure Solutions Group revenue increased 89% to $31.8 billion, while segment operating income rose 225% to $4.8 billion. The segment's operating income rate improved to 15.0% from 8.8%. Traditional servers and networking revenue increased 122% to $10.5 billion, and storage revenue grew 26% to $4.9 billion. Dell's AI customer base surpassed 6,500 across neocloud, sovereign, and enterprise categories.
Inventory and receivables build up
Inventories reached $21.3 billion, up from $15.1 billion three months earlier. Short-term financing receivables increased to $12.8 billion from $8.2 billion, and accounts payable rose to $49.7 billion from $45.3 billion. Supplier financing offsets part of that asset build, but cash conversion still depends on component commitments, deployment timing, and customer payments. Insider Monkey's database showed 77 hedge funds holding Dell at the end of the second quarter of 2026, up from 72 funds three months earlier.
Operating cash flow, unadjusted free cash flow, and backlog conversion will determine whether Dell's AI demand surge produces durable cash flow.
Source: Insider Monkey
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