Dell CFO David Kennedy Talks Earnings Call

Summary

Podcast Summary: Dell CFO David Kennedy Talks Earnings Call

Podcast: Bloomberg Talks
Host: Ed (Bloomberg)
Guest: David Kennedy, CFO of Dell Technologies
Date: May 28, 2026

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Episode Overview

This episode centers on Dell's blockbuster quarterly earnings, led by CFO David Kennedy. The conversation unpacks Dell’s impressive financial performance, explores the broad factors driving growth—particularly in the context of AI—and addresses recent government contracts. Listeners gain insights into Dell’s evolving business landscape, the sustainability of demand for AI-related infrastructure, and the company’s outlook for 2026 and beyond.

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Key Discussion Points & Insights

1. Dell's Record-Breaking Quarter ([00:26] - [01:32])

• Financial Highlights:

  • Revenue growth of 88% year-on-year.
  • EPS growth at 214%.
  • Record cash flows, attributed to surging global infrastructure demands.
  • Full-year outlook raised to $167 billion in sales, with $60 billion from AI servers and $27 billion in new business.

• Quote:

  • "88% revenue growth, you know, 214% EPS growth and record cash flows... given us confidence... to add to that full year guide. Adding $27 billion to the revenue. $167 billion now, almost 50% increase year on year."
    — David Kennedy (00:51)

2. Breadth of Demand Beyond One Customer ([01:32] - [02:54])

• Sector Diversification:

  • Growth is broad-based across segments, not limited to a single hyperscaler or cloud provider.
  • CSG (Client Solutions Group) saw 17% growth in Q1; similar momentum expected for Q2.
  • Server and networking business grew by 92% in Q1.
  • Outlook for storage and server markets increased—every product segment is contributing.

• Quote:

  • "It's more prevalent across our products, across our verticals, across our, our customer base... demand if you like, beyond the GPU in terms of the opportunities ahead."
    — David Kennedy (01:52)

3. Sizing AI Demand—Beyond GPUs ([02:31] - [02:54])

• AI Demand Quantification:

  • Of the increased guidance, an additional $10B is attributed to servers alone, up from $50B to $60B.
  • Remaining revenue guidance largely stems from core business growth outside of pure AI infrastructure.

• Quote:

  • "...the rest is in our core business and it's more prevalent across csg, traditional server and the storage market. So, you know, strong across the board."
    — David Kennedy (02:37)

4. Government Contracts & Revenue Impact ([02:54] - [03:59])

• Surprising Defense Deal:

  • Dell signed a $10B U.S. defense deal (approx. $2B/year over five years).
  • The deal is significant but represents only a small portion of the newly revised revenue forecast for this year (less than $1B for 2026).

• Continued Commitment to Government:

  • Dell maintains longstanding relationships supporting U.S. and international government agencies with technology and services, including software.

• Quote:

  • "We obviously support all the federal agencies in the U.S. but it's also more prevalent across the globe on all the government agencies. So this is just another mark...when any customer, whether it be federal or... enterprise based, is looking for us to help them in their technology needs and the solutions we're there to help them."
    — David Kennedy (03:18)

  • "That contract is 9 billion over five years. You know, at most it's a billion, less than $1 billion for this year. So again, a very small part of what is a broad based discussion..."
    — David Kennedy (03:59)

5. Durability and Sustainability of AI-driven Growth ([04:25] - [05:27])

• Industry-Wide Transformation:

  • AI demand is not a fleeting phenomenon or isolated to servers; it permeates the entire infrastructure and technology solutions stack.
  • The transition from AI model training to inferencing is expanding the Total Addressable Market (TAM) and the opportunities for Dell.
  • The company is optimistic that this shift represents long-term, durable growth and a new baseline for the business.

• Quote:

  • "I think it goes beyond the AI server business. I think it's AI demand in total across the solution and infrastructure stack..."
    — David Kennedy (04:50)

  • "... as we move from training models into inferencing, those inferencing workloads are creating a net new environment, a net new TAM... we're excited by that and I think that makes it a more broad based durable growth over the long term for us as we see that."
    — David Kennedy (04:50)

6. Broad-based Customer and Sector Growth ([05:27] - [06:12])

• No Single Driver:

  • Growth is spread across all verticals—Neo Clouds, Sovereign, and Enterprise customers.
  • A five-quarter pipeline review shows all individual verticals growing independently in both geographical and sector-based segments.

• Quote:

  • "If you look at our five quarter pipeline, all individual verticals are growing in their own right and it shows again that the scale and the opportunity that's both geo and vertical based."
    — David Kennedy (05:42)

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Most Memorable Moments

• The scale of Dell’s year-on-year growth and the $27B uplift in guidance surprised both analysts and the market ([00:51]).
• The candid clarification that the massive government contract plays a modest role in the overall numbers ([03:59]).
• Kennedy’s repeated emphasis on the broad-based and durable nature of AI-driven growth—the next era for Dell ([04:50], [05:42]).

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Timestamps for Key Segments

• Dell’s Revenue Surge & Outlook: [00:26] - [01:32]
• Customer Base and Segment Contributions: [01:32] - [02:54]
• AI Demand—Beyond GPU: [02:31] - [02:54]
• Government & Defense Deal Explained: [02:54] - [03:59]
• Long-term Growth and Market Durability: [04:25] - [05:27]
• Sector and Pipeline Granularity: [05:27] - [06:12]

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Conclusion

This episode paints a vivid picture of Dell’s transformation in the AI era, propelled by robust, broad-based demand and a confident outlook for continued growth. David Kennedy’s discussion clarifies that while headline-grabbing deals matter, Dell's surge is rooted in systemic shifts across industries, suggesting a new, sustained level of business performance. The focus on infrastructure, inferencing workloads, and diversified customer segments reveals where both Dell and the tech market are heading in 2026.

Transcript

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[Ed (Interviewer)]

A lot of stories within this one. David, you'll tell me it's a strong quarter. I think the market right now is staring at the outlook for the fiscal year ending January 27th. $167 billion of sales, 60 billion of that being AI servers. Something in there is new. In fact, $27 billion of something in there is new in the outlook. What is it?

[David (Company Executive)]

Yeah, afternoon, Ed. Look, it's a tremendous start to the quarter, obviously in the year ahead. 88% revenue growth, you know, 214% EPS growth and record cash flows, you know, built on real, durable and accelerating globally the amount of infrastructure that's needed out there. If you look at this, you know, really production at scale, all of those things have given us confidence, as you say, to add to that full year guide. Adding $27 billion to the revenue. $167 billion now, almost 50% increase year on year. EPS of $17.9. Really strong. And you're really looking forward to the year ahead.

[Ed (Interviewer)]

David, is this coming from sort of one single hyperscaler customer? Is it the Neo clouds or is there more sort of granularity you can give me about what is actually happening in the world? Completely acknowledge that the CPU server is back. Right? That's clear in the quarter gone. But there must be something more happening under the surface here.

[David (Company Executive)]

Yes, this is more broad based and more prevalent across the ecosystem and our solutions. So CSG growth, 17% growth in Q1. We're guiding to almost similar in Q2. You mentioned the traditional server networking business grew 92% in Q1. We're expecting a strong guidance to go through the year. Obviously we've taken up our storage guide, our server guide to $60 billion. And storage will grow every single quarter to go to the year. So it's more prevalent across our products, across our verticals, across our, our customer base. So really more broad base and you know, demand if you like, beyond the GPU in terms of the opportunities ahead.

[Ed (Interviewer)]

Can you quantify that? The AI demand but beyond the GPU?

[David (Company Executive)]

Yeah, if you look at our guide, it's up $27 billion. We've taken our guide up $10 billion from 50 billion to 60 billion. So obviously the rest is in our core business and it's more Prevalent across csg, traditional server and the storage market. So, you know, strong across the board.

[Ed (Interviewer)]

Been under the working assumption for quite a while now that the US government's your biggest customer. Think the world was a little bit surprised yesterday. I was a little bit surprised about the $10 billion defense deal. Basically $2 billion per year for five years. What is that? I'm trying to understand, is Dell in the software game here in that deal or what does it represent to you, David?

[David (Company Executive)]

No, look, we're historically selling software over many years. We obviously support all the federal agencies in the U.S. but it's also more prevalent across the globe on all the government agencies. So this is just another mark, if you like, in terms of the broad solutions when, when any customer, whether it be federal or whether it be enterprise based, is looking for us to help them in their technology needs and the solutions we're there to help them. We have those long standing relationships and this isn't just another example of that.

[Ed (Interviewer)]

Can I just double check something? Mechanically speaking, the $9.7 billion deal, is that reflected in the updated outlook you gave? Like it's, it was something that was baked in.

[David (Company Executive)]

Well, again, if you think of the guide, we're up $27 billion for the year. That contract is 9 billion over five years. You know, at most it's a billion, less than $1 billion for this year. So again, a very small part of what is a broad based discussion around broad technology opportunities, solutions that our customers are looking for and making sure we can fulfill as many customer needs as we can in this environment.

[Ed (Interviewer)]

Some people might say in this environment what's $1 billion here or there in every given quarter or balance of financial year. I think the sense the analysts are trying to get from the call is the staying power of this demand, how sustainable it is. But I think another way of looking at it, David, is have you set yourself a new baseline going forward of what the world is like for particularly the server business?

[David (Company Executive)]

Yeah, I think it goes beyond the AI server business. I think it's AI demand in total across the solution and infrastructure stack that's there. If you look at the broad based opportunities that are appearing, I think as we move from training models into inferencing, those inferencing workloads are creating a net new environment, a net new TAM if you like, that's there to go attack and go go balance from a customer perspective, we're seeing that and those education elements are coming in as part of the opportunity that's in front of us. We're excited by that and I think that makes it a more broad based durable growth over the long term for us as we see that.

[Ed (Interviewer)]

I appreciate that you've outlined twice that it's broad based. Was there one big customer or even sector in the quarter gone or one big customer sector for the outlook in the year that has changed the trajectory for you

[David (Company Executive)]

though it's again more broad based. If you look at our segments, Neo Clouds, Sovereign, those enterprise customers you have heard and spoke with Michael last week in relation to our 5,000 customers and the enterprise side in relation to AI. As we broad based out those factories, you know there's growing. If you look at our five quarter pipeline, all individual verticals are growing in their own right and it shows again that the scale and the opportunity that's both geo and vertical based.

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