10-K: Dell Technologies Reports Strong FY26 Growth Driven by AI Servers

Sentiment:

Annual Report 16 March 2026 4:12 PM

Dell Technologies reported a 19% increase in net revenue for Fiscal 2026, reaching $113.5 billion, primarily fueled by significant demand for AI-optimized servers and disciplined cost management.

Delay expectedThe Shelf Registration Filing Deadline under the Second Amended and Restated Registration Rights Agreement was extended for three months to March 31, 2026.The timing of demand and subsequent shipments for AI-optimized servers has inherent non-linearity, driving variability in revenue recognition.Next-generation AI components, for which demand remains high, are expected to be subject to supply constraints, potentially delaying product availability.

Capital raiseIssued $4.0 billion principal amount of Senior Notes on April 1, 2025, for general corporate purposes.Issued $4.5 billion principal amount of Senior Notes on October 6, 2025, for general corporate purposes and to prepay existing debt.DFS debt increased by $428 million to $9.1 billion, primarily from securitization and structured financing programs to fund the expansion of the DFS business.The company may access debt and capital sources to provide financing for customers and for general corporate purposes, including working capital, acquisitions, and funding customer receivables.

Better than expectedNet revenue increased by 19% to $113.5 billion, significantly exceeding prior year performance.Operating income increased by 31% (GAAP) and 17% (non-GAAP), demonstrating strong profitability improvements.Net income increased by 30% (GAAP) and 20% (non-GAAP), reflecting robust bottom-line growth.Cash flow from operations surged by 147% to $11.2 billion, indicating excellent cash generation.The Board approved a 20% increase in the quarterly dividend rate, signaling strong confidence in future financial health.

Summary

Net revenue increased 19% to $113.5 billion in Fiscal 2026, up from $95.6 billion in Fiscal 2025.
Product net revenue increased 27% to $90.4 billion, driven by AI-optimized servers and traditional servers/networking offerings.
Services net revenue decreased 4% to $23.1 billion, mainly due to the termination of the VMware Resale agreement and the sale of Secureworks.
Operating income rose 31% to $8.1 billion (GAAP) and 17% to $10.0 billion (non-GAAP) in Fiscal 2026.
Net income increased 30% to $5.9 billion (GAAP) and 20% to $7.0 billion (non-GAAP) in Fiscal 2026.
Diluted earnings per share was $8.68 (GAAP) and $10.30 (non-GAAP) for Fiscal 2026.
Cash flow from operations was $11.2 billion, a 147% increase from Fiscal 2025.
Infrastructure Solutions Group (ISG) net revenue increased 40% to $60.8 billion, with AI-optimized servers revenue growing 166% to $24.7 billion.
Client Solutions Group (CSG) net revenue increased 5% to $51.0 billion, driven by commercial offerings.
Repurchased approximately 54 million shares of Class C Common Stock for $6.0 billion in Fiscal 2026.
The Board approved a 20% increase in the quarterly dividend rate to $0.63 per share per fiscal quarter, beginning in the first quarter of Fiscal 2027.
Total debt, principal amount, increased by $7.0 billion to $31.8 billion as of January 30, 2026.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong performance, particularly in the high-growth AI server market, despite some margin pressure and a decline in services revenue from divested businesses. The increased dividend and share repurchases signal confidence.

Positives

Net revenue grew 19% to $113.5 billion in Fiscal 2026, indicating strong overall business expansion.
AI-optimized servers revenue surged 166% to $24.7 billion, highlighting successful penetration and demand in a high-growth market.
Operating income increased significantly by 31% (GAAP) and 17% (non-GAAP), demonstrating improved profitability.
Net income saw substantial growth of 30% (GAAP) and 20% (non-GAAP).
Cash flow from operations dramatically increased by 147% to $11.2 billion, providing strong liquidity.
The Board approved a 20% increase in the quarterly dividend rate to $0.63 per share, signaling confidence in future performance and commitment to shareholder returns.
Repurchased $6.0 billion of Class C Common Stock in Fiscal 2026, actively returning capital to shareholders.
Dell Financial Services (DFS) maintains a strong credit quality in its financing receivables portfolio, with a principal charge-off rate of 0.2% in Fiscal 2026.
Successful execution of business modernization initiatives contributed to disciplined cost management and a decline in operating expense rate.

Negatives

Services net revenue decreased 4% to $23.1 billion, primarily due to the termination of the VMware Resale agreement and the sale of Secureworks.
Gross margin percentage declined by 220 basis points (GAAP) to 20.0% and 240 basis points (non-GAAP) to 20.4%, mainly due to a shift in mix towards lower-margin AI-optimized servers.
Consumer Client Solutions Group (CSG) net revenue decreased 8% due to lower average selling prices and units sold.
Total debt, principal amount, increased by $7.0 billion to $31.8 billion as of January 30, 2026.
Increased inventory levels and higher purchase obligations were driven by growing demand for AI-optimized servers, creating new working capital dynamics.
The inherent non-linearity in the timing of demand and subsequent shipments for AI-optimized servers continues to drive variability in revenue.
Anticipate notable inflation for component costs in Fiscal 2027, which could impact future margins.

Risks

Adverse global economic conditions, including elevated inflation and interest rates, geopolitical volatility, and trade protection measures, could harm business and reduce net revenue and profitability.
Intense competition and rapid technological advances in hardware, software, and services, including AI and cloud, could adversely affect market share, revenue, and profitability.
Failure to successfully execute strategy and related initiatives, particularly in ISG (storage, server, networking, AI-optimized solutions) and CSG (PC market decline, lengthening replacement cycles), could adversely affect operating results.
Reliance on single-source or limited-source suppliers for critical products and components may adversely affect availability, timely delivery, and costs.
The nature of demand for AI solutions, primarily from a small number of larger customers, may cause fluctuations in results, intense pricing pressure, and higher working capital commitments.
Risks associated with the use of AI in products and operations, including reputational harm, legal liability, cybersecurity threats, and intellectual property infringement claims, are increasing.
Security incidents, including sophisticated cyber-attacks, could disrupt operations, compromise proprietary or confidential information, and result in significant costs and legal liabilities.
The multi-class common stock structure, with Michael Dell and Silver Lake Partners controlling approximately 91.7% of total voting power, may adversely affect the trading price of Class C Common Stock and limit the influence of other stockholders.
Future sales, or the perception of future sales, of a substantial amount of Class C Common Stock could depress its trading price.
As a controlled company under NYSE rules, Dell Technologies qualifies for exemptions from certain corporate governance requirements, potentially affording Class C Common Stock holders fewer protections.
The certificate of incorporation designates Delaware courts as the exclusive forum for certain legal actions, which could limit stockholders' ability to obtain a favorable judicial forum.

Future Outlook

Dell Technologies expects significant Infrastructure Solutions Group (ISG) and modest Client Solutions Group (CSG) net revenue growth in Fiscal 2027. ISG growth will be driven by increased demand across servers and networking, particularly AI-optimized servers, and storage offerings. CSG net revenue growth is anticipated from the continuation of the PC refresh cycle. Overall net revenue growth is expected for the full fiscal year, despite anticipated notable inflation for component costs and continued reduction in Corporate and other net revenue due to divested businesses. The company remains committed to disciplined cost management and business modernization initiatives, but expects next-generation AI components to be subject to supply constraints.

Management Comments

"Our vision is to become the most essential technology partner."
"We intend to realize our vision by executing our strategy of leveraging our strengths to extend our leadership positions and capture new growth."
"We believe our unique operating advantages provide a foundation to foster business growth, enable innovation, drive efficiencies, and continue to position us for long-term success."
"We continue to see opportunities to create value and grow as we respond to long-term demand for our IT solutions driven by a dataand AI-enabled world."
"We have demonstrated our ability to adjust to changing market conditions with complementary solutions and innovation across both segments of our business, an agile workforce, and the strength of our global supply chain."

Industry Context

StockSavvy.ai notes that Dell's strong performance in AI-optimized servers aligns with the broader industry trend of increasing investment in artificial intelligence infrastructure, positioning them well against competitors like HPE and NVIDIA in the server space. The modest growth in Client Solutions Group, driven by a PC refresh cycle, indicates a stabilization and potential recovery in the personal computing market, which has seen fluctuations in recent years. The termination of the VMware resale agreement reflects a strategic shift post-Broadcom acquisition, potentially impacting Dell's software distribution but reinforcing its focus on integrated hardware solutions.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Chief Financial Officer	NA	David Kennedy	September 2025	Appointment to oversee all aspects of finance, corporate development, global business operations, and Dell Financial Services.
President and Chief Customer Officer	President, Global Sales and Customer Operations	William F. Scannell	January 2026	Appointment to engage with customers and partners, guide customer strategy, and advance high-value initiatives.
Chief Marketing Officer	Senior Vice President of Global Field and Partner Marketing	Geraldine Tunnell	March 2024	Appointment to directly responsible for global marketing organization strategy and all aspects of marketing efforts.
President, Global Sales	President of Global Sales Modernization & GTM	Peter Trizzino	January 2026	Appointment to oversee Sales, Presales, and Dell's global partner ecosystem to drive revenue growth and customer outcomes.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Dividend Policy Change	Board of Directors approved a 20% increase in the quarterly dividend rate to $0.63 per share per fiscal quarter.	First quarter of Fiscal 2027	Positive for shareholders, signaling confidence in future financial performance and commitment to returning capital.
Share Repurchase Program Authorization	Board of Directors authorized an additional $10 billion for the Class C Common Stock repurchase program.	February 26, 2026	Positive for shareholders, indicating continued commitment to enhancing shareholder value through buybacks.
Director Compensation Program Update	Amended and Restated Compensation Program for Independent Non-Employee Directors became effective, detailing annual retainers and committee chair retainers with options for cash, deferred stock units (DSUs), or stock.	September 30, 2025	Ensures competitive compensation for independent directors, aligning their interests with long-term company performance through equity-based awards.
Controlled Company Status	The company operates as a 'controlled company' under NYSE rules due to the voting control of Michael Dell and Silver Lake Partners (approximately 91.7% of total voting power as of March 9, 2026).	Ongoing	Allows exemptions from certain NYSE corporate governance requirements (e.g., majority independent board, fully independent compensation/nominating committees), which may limit protections for other Class C Common Stock holders.
Exclusive Forum Provision	Certificate of incorporation designates Delaware state courts and U.S. federal district courts as the sole and exclusive forum for certain legal actions.	Ongoing	Could limit the ability of Class C Common Stock holders to obtain a favorable judicial forum for disputes with the company or its directors, officers, or controlling stockholders.

Legal Proceedings

A putative class action, *Lowbruck et al. v. Dell Technologies Inc., et al.*, was filed on January 28, 2026, alleging breach of fiduciary duties under ERISA related to the Dell 401(k) Plan, seeking unspecified damages, fees, and costs. The company intends to vigorously defend this action.
The IRS proposed significant adjustments primarily relating to certain business integration transactions for the federal income tax examination of fiscal years 2018 through 2019. The company submitted a written protest in August 2023 and received a rebuttal in April 2024, intending to contest these through administrative appeals.
The IRS is currently conducting a federal income tax examination of the company for fiscal years 2020 through 2022.
The company is currently under income tax audits in various U.S. state and foreign taxing jurisdictions and is undergoing negotiations and contested proceedings related to these matters.

Related Party Transactions

VMware was considered a related party until Broadcom Inc.'s acquisition on November 22, 2023, after which the related party relationship terminated.
Prior to the acquisition, Dell Technologies integrated and bundled select VMware products and services, acted as a distributor for standalone VMware offerings, and Dell Financial Services provided financing to certain VMware end-users.
For Fiscal Year 2024 (through November 21, 2023), related party cost of net revenue for VMware products was $1,010 million and for services was $2,810 million. Sales and leases of products to VMware were $103 million.
Post-acquisition, Dell Technologies no longer acts as a distributor of standalone VMware offerings but continues to integrate certain VMware products and services with its VxRail solution.
Net income tax indemnification receivables from VMware were immaterial as of January 30, 2026, and January 31, 2025.
Transactions with other related parties during the periods presented were immaterial, individually and in aggregate.

Stakeholder Impact

Shareholders: Positive impact from strong financial performance, increased dividends, and share repurchases. Potential negative impact from increased debt, gross margin pressure, and risks associated with the multi-class stock structure and controlling stockholders.
Employees: Impacted by employee reorganizations and limitations on external hiring as part of cost management initiatives, leading to a reduction in overall headcount. However, the company states it continues efforts to empower employees and attract/retain talent through an inclusive culture, training, development, and competitive benefits.
Customers: Benefit from innovative technology solutions, particularly in AI, and flexible payment/consumption options. Potential impact from supply constraints on next-generation AI components.
Suppliers: Increased purchases of certain components for AI-optimized servers, leading to increased purchase obligations. Participation in the Supply Chain Finance Program provides liquidity options for eligible suppliers.
Creditors: Total debt increased to $31.8 billion, but the company believes it can meet its debt principal and interest payments from existing and expected cash sources. DFS financing receivables maintain strong credit quality.

Next Steps

Continue to expand sales of AI solutions to a broader customer base beyond current large customers and cloud service providers.
Monitor and manage component costs and the rapidly evolving commodity supply environment in Fiscal 2027.
Continue disciplined cost management and business modernization initiatives, including employee reorganizations and hiring limitations.
Evaluate opportunities for strategic investments through Dell Technologies Capital in emerging technology areas such as storage, software-defined networking, AI, and cloud.
May make targeted acquisitions of businesses that advance strategic objectives and accelerate innovation.
Continue returning capital to stockholders through share repurchase programs and dividend payments.
Continue discussions with the IRS Independent Office of Appeals regarding federal income tax examination for fiscal years 2018-2019, with resolution expected beyond the next twelve months.
Monitor developments and guidance related to the One Big Beautiful Bill Act (OBBBA) for potential impacts on future periods.

Key Dates

Date	Description
December 25, 2018	Date of the Second Amended and Restated Registration Rights Agreement.
May 27, 2019	Date of Amendment No. 1 to the Second Amended and Restated Registration Rights Agreement.
April 15, 2020	Date of Amendment No. 2 to the Second Amended and Restated Registration Rights Agreement.
September 15, 2020	Date of Amendment No. 3 to the Second Amended and Restated Registration Rights Agreement.
December 31, 2020	Original Shelf Registration Filing Deadline under the Registration Rights Agreement.
October 27, 2021	Dell Bank issued 500 million Euro of 0.5% senior unsecured five-year eurobonds due October 2026.
November 1, 2021	Completion of the VMware Spin-off.
October 18, 2022	Dell Bank issued 500 million Euro of 4.5% senior unsecured five-year eurobonds due October 2027.
January 24, 2023	Issuance of Senior Notes.
June 20, 2023	Dell Technologies Inc. 2023 Stock Incentive Plan became effective upon stockholder approval.
June 2023	Company received a Revenue Agents Report for the federal income tax examination of fiscal years 2018 through 2019.
August 2023	Company submitted a written protest to the IRS relating to certain tax assessments.
October 4, 2023	Company established a new consumer revolving financing program with Comenity Capital Bank and sold its U.S. consumer revolving customer receivables portfolio.
November 22, 2023	VMware acquired by Broadcom Inc., terminating the related party relationship with Dell Technologies.
February 2, 2024	Fiscal year ended.
March 18, 2024	Issuance of Senior Notes.
March 25, 2024	Commercial Framework Agreement with VMware terminated.
April 2024	Company received a rebuttal from the IRS to its written protest regarding tax assessments.
June 13, 2024	Dell Bank issued 500 million Euro of 3.6% senior unsecured five-year eurobonds due June 2029.
August 20, 2024	Board approved an amendment to terminate the U.S. pension plan.
September 30, 2024	Effective date of the U.S. pension plan termination.
October 8, 2024	Issuance of Senior Notes.
November 2024	FASB issued guidance to improve disclosures about a public entity's expenses.
January 31, 2025	Fiscal year ended.
February 3, 2025	Sale of Secureworks Corp. to Sophos Inc. completed for approximately $0.9 billion.
April 1, 2025	Issuance of $4.0 billion principal amount of Senior Notes.
July 4, 2025	The One Big Beautiful Bill Act (OBBBA) was enacted into law in the United States.
August 1, 2025	Aggregate market value of the company's common stock held by non-affiliates was approximately $39.2 billion.
September 9, 2025	Separation Agreement and Release between the Company and Yvonne McGill.
September 24, 2025	Company settled remaining obligations under the U.S. pension plan.
September 30, 2025	Compensation Committee approved a stock option grant to the Chief Operating Officer.
September 30, 2025	Amended and Restated Compensation Program for Independent Non-Employee Directors became effective.
October 6, 2025	Issuance of $4.5 billion principal amount of Senior Notes.
November 2025	Company issued 18,000 shares of Class C Common Stock upon conversion of Class A Common Stock.
December 16, 2025	Consent to the Extension of Registration Rights Under the Second Amended and Restated Registration Rights Agreement dated, extending Shelf Registration Filing Deadline to March 31, 2026.
December 18, 2025	Richard Troy Sharp, Chief Accounting Officer, adopted a written plan for the sale of up to 2,071 shares of Class C Common Stock under Rule 10b5-1(c).
January 15, 2026	Jeffrey W. Clarke, Vice Chairman and Chief Operating Officer, adopted a written plan for the sale of up to 116,000 shares of Class C Common Stock under Rule 10b5-1(c).
January 30, 2026	Fiscal year ended.
February 26, 2026	Board approved a 20% increase in the dividend rate to $0.63 per share per fiscal quarter beginning in Q1 Fiscal 2027, and authorized an additional $10 billion for the Class C Common Stock repurchase program.
March 9, 2026	Date for common stock outstanding figures and executive officer information.
March 16, 2026	Date of the Annual Report on Form 10-K.
March 31, 2026	Extended Shelf Registration Filing Deadline.
June 2026	Repaid the remaining outstanding $0.5 billion principal amount of 6.02% Senior Notes due June 2026 (subsequent event).
July 7, 2026	Effective date for one tranche of the asset-based financing facility.
December 15, 2026	Public entities must adopt new expense disaggregation disclosures guidance for fiscal years beginning after this date.
December 22, 2026	Securitization facility in Europe effective through this date.
January 29, 2027	Fiscal year ending.
July 3, 2027	Effective date for one of two unsecured Singapore facilities.
July 7, 2027	Effective date for one tranche of the asset-based financing facility.
December 15, 2027	Public entities must adopt new internal-use software capitalization guidance for fiscal years beginning after this date.
January 15, 2028	Canadian facility effective through this date.
April 2028	4.75% Senior Notes due.
January 31, 2029	Tax holiday in Singapore in effect until this date.
February 2029	4.15% Senior Notes due.
June 2029	Dell Bank 3.6% senior unsecured eurobonds due.
April 2030	5.00% Senior Notes due.
February 2031	4.50% Senior Notes due.
January 31, 2031	Company adjusted free cash flow performance goal for COO option award as of this date.
March 15, 2031	Continued service through date for COO option award vesting.
April 2032	5.30% Senior Notes due.
October 2032	4.75% Senior Notes due.
April 2035	5.50% Senior Notes due.
February 2036	5.10% Senior Notes due.

Recommendation

strong buy

The company delivered exceptional Fiscal 2026 results with significant revenue and operating income growth, largely driven by robust demand for AI-optimized servers. The 20% dividend increase and substantial share repurchase authorization signal strong management confidence and commitment to shareholder returns. While gross margin faced some pressure from the mix shift to AI servers and debt increased, the overall financial health, cash flow generation, and strategic positioning in high-growth technology areas like AI make it a compelling investment. The PC refresh cycle also provides a tailwind for the CSG segment.

Keywords

Dell Technologies, 10-K, Annual Report, Fiscal 2026, AI-optimized servers, Infrastructure Solutions Group, Client Solutions Group, Revenue Growth, Operating Income, Cash Flow, Share Repurchase, Dividends, Debt, Cybersecurity, Risk Factors, Corporate Governance, Technology Industry, IT Solutions, Digital Transformation, Cloud Native, Software-Defined, ESG, Supply Chain, VMware, Secureworks

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