BONUS: Dell CFO David Kennedy Talks Earnings & Upbeat Outlook Fueled by AI

Summary

Bloomberg Tech: BONUS – Dell CFO David Kennedy Talks Earnings & Upbeat Outlook Fueled by AI

Release Date: May 29, 2026
Host: Ed Ludlow (Bloomberg)
Guest: David Kennedy (CFO, Dell Technologies)

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Episode Overview

This episode zeroes in on Dell Technologies’ standout quarterly performance and explores the company’s aggressive, AI-fueled growth outlook. Host Ed Ludlow and Dell CFO David Kennedy break down how surging AI infrastructure demand is reshaping Dell’s business, the sources and granularity of the new revenue, and the impact of major deals—including the buzzworthy US government defense contract.

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Key Discussion Points & Insights

1. Dell’s Exceptional Quarter and Bold Revenue Outlook

• Quarterly Growth Stats:
  • Revenue up 88%
  • EPS up 214%
  • Record cash flows
• Revenue Guidance:
  • Outlook for fiscal year ending January 2027: $167 billion in sales (up nearly 50% YoY, $27B higher than previous guidance)
  • AI server revenue target raised from $50B to $60B
  • EPS guidance set to $17.9
• Underlying Themes:
  • Growth built on “real, durable and accelerating globally the amount of infrastructure that's needed out there” (David, 00:51)
  • Revenue and demand seen as broad-based, not reliant on one hyperscaler or sector

2. Breadth of Demand: Beyond GPUs

• Diverse Demand Patterns:
  • CSG (client solutions group) growth: 17% in Q1, similar anticipated for Q2
  • Traditional server and networking business jumped 92% in Q1
  • Storage outlook raised; expected to grow every quarter
• Beyond AI GPUs:
  • AI momentum is wide-ranging—touching servers, storage, core business segments, and exceeding GPU-only demand
  • “It's more prevalent across our products, across our verticals, across our customer base. So really more broad based and, you know, demand if you like, beyond the GPU in terms of the opportunities ahead.” (David, 01:52)

3. US Government as a Customer: Decoding the $10B Defense Deal

• Context:
  • US government (federal agencies) has long been a significant customer
  • Recent defense deal: $10B over 5 years (~$2B/year)
• Nature of the Deal:
  • Not solely software—part of “broad solutions” for technology support to federal and global government agencies
  • “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…” (David, 03:18)
• Impact on Outlook:
  • Only a fraction of the massive revenue uptick comes from this deal
  • “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, 03:59)

4. Sustainability and Baseline of Demand

• Analyst Skepticism:
  • Ed probes the sustainability of the current demand: Is this a “new baseline” for Dell’s server business?
• David’s Perspective:
  • Demand transcends AI servers: AI-driven workloads (especially inferencing, not just training) are expanding total addressable market (TAM)
  • “Those inferencing workloads are creating a net new environment, a net new TAM if you like, that's there to go attack and go balance from a customer perspective...” (David, 04:50)
  • Dell sees opportunities as structural and sticky, not fleeting
• Summary Judgment:
  • The surge isn’t a spike; it’s a long-term, evolving opportunity shifting Dell’s baseline upward

5. Customer and Sector Granularity

• No Single Driver:
  • Growth is spread across Neo Clouds, sovereign cloud, and enterprise customers
  • Five-quarter pipeline shows individual verticals (industries) are growing independently—no single sector dominates
  • “[Our growth is] again more broad based. If you look at our segments, Neo Clouds, Sovereign, those enterprise customers...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, 05:42)

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Memorable Quotes

• On AI demand driving revenue:

  • “88% revenue growth, you know, 214% EPS growth and record cash flows...production at scale, all of those things have given us confidence, as you say, to add to that full year guide.”
    — David Kennedy, 00:51

• On spreading opportunity:

  • “It's more prevalent across our products, across our verticals, across our customer base. So really more broad based and, you know, demand if you like, beyond the GPU in terms of the opportunities ahead.”
    — David Kennedy, 01:52

• On government contracts:

  • “We have those long standing relationships and this isn't just another example of that.”
    — David Kennedy, 03:18

• On sustainability of growth:

  • “Those inferencing workloads are creating a net new environment, a net new TAM if you like, that's there to go attack...we're excited by that and I think that makes it a more broad based durable growth over the long term for us.”
    — David Kennedy, 04:50

• On dispersed and diversified growth:

  • “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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Timestamps for Key Segments

• 00:26 – 01:32: Ed and David discuss Dell’s explosive quarter and guidance boost
• 01:32 – 02:37: Ed probes specifics on where demand is coming from (beyond hyperscalers and GPUs)
• 02:54 – 03:59: Deep dive into the US government defense deal and its impact on outlook
• 04:25 – 04:50: Ed asks about the sustainability and baseline of current demand
• 05:27 – 05:42: Customer/sector breakdown; “broad based” becomes the key theme

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Final Thoughts

This concise, numbers-driven conversation delivers rare insight into how Dell’s business is being transformed by the AI revolution—but emphasizes that the company’s growth is neither narrow nor transitory. Instead of “one big customer” or “one product line,” David Kennedy points to a demand surge across geographies, verticals, and product lines, cementing a new, resilient baseline for Dell’s future. The tone is confident, upbeat, and grounded in data, with a subtle thread of competitive pride as Dell positions itself as central in the AI-driven infrastructure boom.

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 mentioned, 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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