Dell: $95B Backlog And A New Blowout FY27 Guide

Heading into the Q2 print, I expected another full-year guide increase. Dell raised FY27 sales guidance by $25 billion. I did not expect anything close to that. ISG's operating margin jumped to 15.0% from 8.8% a year ago. I was expecting AI servers to keep dragging margins lower. The AI backlog jumped $43.7 billion sequentially to $95 billion. Traditional server sales increased 23% sequentially, and storage was up 12% QoQ. That said, AI server revenue grew just 2% (see the previous bullet point for the backlog). I upgrade to a buy. I think Q2 FY27 was a table-pounding moment for Dell to prove that Q1 FY27 (Dell was up 32% the day after that print) was not a one-off quarter.