Can This Number Push Dell Stock Higher?
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One business stands out at Dell Technologies (DELL): traditional servers, the non-AI machines companies run in their own data centers. You probably think of Dell as an AI server seller, but this older business is growing fast. Yet the stock lost 30.1% from October 2 to November 2, 2026, while the S&P 500 fell 2.3%. So how fast are Dell’s traditional server sales growing, and who is buying?
How Fast Are Dell’s Traditional Server Sales Growing?
Management said on the September 1, 2026 call that Dell’s traditional server and networking revenue reached $10.5 billion in fiscal Q2 2027, up 122% from a year earlier. They added that Dell has gained more than 10 points of traditional server share over the past two quarters.
The buyers are mostly not new AI customers. Management said the growth came primarily from Dell’s historical enterprise customers, noting that demand was even greater than the results showed because Dell is supply constrained. These customers are replacing aging servers with new ones that hold more cores, more memory and more storage. Management said 1.2 million older servers in Dell’s installed base will have to be upgraded. The demand comes from companies Dell has sold to for years, and a large pool of their old machines is still waiting to be replaced.
Will Dell’s Customers Keep Paying Higher Prices?
So far, demand has held up. Management said demand outran supply in both fiscal Q1 and Q2 2027. During the September 1 call, the discussion turned to how much more customers can pay, and management answered that part of the server growth comes from price increases as Dell’s own input costs keep rising. Memory chips are the tightest of those inputs, and management named DRAM, followed by NAND, as its main supply constraints.
Dell’s profit margin widened while those prices rose. Operating margin was 11.6% in fiscal Q2 2027, up from 6.4% in fiscal Q2 2026. Management said scale was the single biggest lever behind the improvement.
The picture is weaker for cash. Cash from operations was $2.23 billion in fiscal Q2 2027, below $2.54 billion in fiscal Q2 2026. In that quarter, Dell’s faster sales showed up in profit but not in cash. Over the four quarters to July 31, 2026, cash from operations was $12.2 billion, up from $7.48 billion a year earlier.
What You Miss In Dell’s Server Growth
Despite that fast growth, traditional servers are still a minority of Dell’s sales. Traditional server and networking revenue accounted for about 22% of Dell’s $47.0 billion in fiscal Q2 2027 revenue. AI server revenue was larger, at $16.4 billion that quarter. The growth rate also mixes more servers sold with higher prices charged for each, since management tied part of the growth to price increases.
If enterprise customers slow their upgrades, the server growth slows with them. If Dell cannot keep passing on higher memory costs, its wider margin is at risk.
Demand to replace aging servers is holding so far, and the pool of machines still waiting is large. Customers’ willingness to keep paying higher prices is less settled. Dell is expected to report its fiscal Q3 2027 results in November 2026, and traditional server revenue and cash from operations are the numbers to watch.
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