DELL

Dell is executing well on the demand it describes in the MD&A: with AI-optimized servers now large enough to be broken out as its own product category within ISG, FY2026 revenue jumped 18.8% to $114B — the highest in the five-year history shown and a sharp recovery from the FY2024 trough of $88.4B. Profitability leverage was even better: operating income +30.7% to $8.15B, net income +29.3% to $5.94B, and diluted EPS +36.1% to $8.68 (helped by a 6.3% cut in share count from $6.01B of buybacks). Operating cash flow more than doubled to $11.2B, easily funding the $6.01B repurchase, $1.46B of dividends, and the announced 20% dividend hike to $0.63/quarter. This is a cash machine returning capital aggressively.

But the quality of the growth is the catch. Gross profit rose only 6.9% while revenue rose 18.8% — gross margin sits at just 20.0% and is being diluted by the very AI-server mix that is driving the top line, because those systems carry lower margins. Net margin is a thin 5.2%. Stockholders' equity is negative (-$2.47B), the product of years of buybacks rather than operating distress, but it removes the balance sheet as a valuation cushion, and gross debt (long-term $23.5B + current $7.99B = $31.5B) now exceeds the $11.5B cash pile even after cash more than tripled.