Paul Frantz — Head of Investor Relations, Dell Technologies Inc
Let's get to Q&A. In order to ensure we get to as many of you as possible, please ask one concise question. Let's go to the first question.
Ben Reitzes — Analyst, Melius Research
Well, let me say congratulations, guys. I don't think I've ever seen a Dell quarter like this. Maybe Michael had one in the dorm room or something, beating expectations, but congrats to you guys. The question that I have is with regard to the inherent level of real demand. When you see something like this, you think there could be some pull forward, especially in the traditional servers and the PCs. The way you guided for the year, obviously by taking up the second half, would imply that the pull forward doesn't have much of an impact stealing from the rest of the year. Can you just go through the puts and takes of the pull forwards in the major segments, please, and how you came up with still a higher second half? Thanks.
Jeff Clarke — Vice Chairman and COO, Dell Technologies Inc
Sure. Thank you, Ben. It was a good quarter. Been here a long time. It's a good quarter. When we look at the demand environment that we are operating in today, it's very different than historical. We think of it as several factors that are driving demand. Clearly what you said, there is a pull-in component, there's a buy-ahead. Customers want to ensure they have access to supply. They're concerned about raising prices, and they're acting. There's also a component of we have large install bases, whether that be in PCs, where you have a third of the units that are four years or older. We were lagging in a Windows 11 refresh and caught up through the quarter against historical refreshes. We have a large number of 14G servers in the install base that need to be upgraded as customers are moving to modernize.
Customers are upgrading their edge, they're upgrading the infrastructure. They're looking for more capable PCs as agentic workloads make their way to the edge. They're looking to consolidate space, power, and cooling to drive efficiency. Our new 18G servers are a great vehicle to do that with its 13:1 consolidation. We're seeing pockets of fundamental new demand. There's new demand driven by AI. There's an AI drag. There's inference. The agentic AI is driving a new marketplace for traditional servers that we haven't seen before. I think the last two are what you would expect out of Dell, are we're winning. We're taking share on all three segments, four if I count AI servers. All four major businesses, PC, server, storage, AI servers, taking share, we're winning.
Lastly, during these times of supply disruption and a lot of puts and takes in the marketplace, customers tend to come to Dell to look for a calming hand, looking for help. We're certainly helping as many customers as we have. That's in PCs. That's in servers, that's in storage.
Those are the demand levers of the demand dynamics that we see across all of the businesses. As we look at our forward-looking pipelines, the pipelines have never been healthier. They're actually growing at greater than historical rates, which gave us confidence to raise the guide by $27 billion of revenue for the year. I hope that helps.
Ben Reitzes — Analyst, Melius Research
Thanks, man.
Paul Frantz — Head of Investor Relations, Dell Technologies Inc
Yeah. Thanks, Jeff.
Mark Newman — Analyst, Bernstein
Hi. Thanks for taking my question and congrats on a great quarter. It would be great to get a bit more clarity on the breakout of growth between units and pricing, particularly for the blowout performance you had on traditional servers. Just adding to some of the stuff you said in previous question, just trying to get better sense for how much confidence you have that this is sustainable beyond just one or two quarters, but through this year and into next year. Thanks so much, and congrats again.
Jeff Clarke — Vice Chairman and COO, Dell Technologies Inc
Thanks, Mark. Very specifically, we grew units in PCs. The last reported quarter, we grew units in consumer PCs and commercial PCs, and obviously the aggregate market. We took share. There's a baseline of growth there. We were already the industry leader in PC revenue, and clearly the inflationary environment has driven up prices. Where we saw that primarily is on high price band products. We were the market leader in high price band in PCs, and that expanded as prices moved up. I won't parse out the specifics, but we had a great growth quarter in units. Obviously, the inflationary environment, we had the execution towards, for example, high-end and gaming and consumer. We had high price bands and commercial PCs. Don't forget the attached business.
The attached business for us around peripherals and around services is very healthy, and when the base business grows, it drags more revenue with each and every unit. On servers, absolute server unit growth occurred. They'll probably kick me under the table here. We had significant unit growth in traditional servers. We had the content growth. We are continuing to see on a year-over-year basis, more cores, more DRAM, more NAND placed in each and every server. You have the uplift of more content, and then obviously that content is growing as well in terms of the inflationary side. Absolute growth in units, absolute growth in the content driven by modernization and consolidation as customers are looking to upgrade and modernize their fleets. We had the inflationary part.
The other part of servers that I think is important to call out is this notion of AI drag and seeing traditional servers move and take on AI workloads. Those AI workloads we're seeing with very dense servers making their way into the neoclouds, into some of the more advanced enterprise users, think semiconductor companies, big tech, that are using it to actually drive some of the inference workloads and agentic workloads inside their environment. That's how I would capture it.
Mark Newman — Analyst, Bernstein
Thanks very much. Really appreciate it.
Jeff Clarke — Vice Chairman and COO, Dell Technologies Inc
You're welcome.
Amit Daryanani — Analyst, Evercore
Yep. Thanks a lot for taking my question and congrats on a really nice set of numbers over here from my side as well. You folks talked about maintaining an appropriate prudence, I think, is the way you framed it, like maintaining appropriate prudence when it comes to your guide, despite raising the back half outlook. If I sort of think about H2 versus H1 math for a second, right? I think the guide implies 48% of the revenues this year will come in the back half of the year. Historically, that number's been around 52%. Can you just touch on how much of that H2 drop you're expecting right now versus historically is from a pull-in versus you folks are perhaps just being a bit more conservative? Is that conservativeness coming more from lack of component availability or where could that lever be? Thank you.
Jeff Clarke — Vice Chairman and COO, Dell Technologies Inc
You bet, Amit. I'm going to lead and David's going to punch the answer home, but I'm the problem. We have a supply issue. We are supply constrained in the second half. It is not a demand issue for us.
David Kennedy — CFO, Dell Technologies Inc
Yeah, that's the story here. The demand continues to outpace the supply. That demand is broad-based, as Jeff said, it's going beyond the GPU, there's more AI opportunities from a CPU perspective, traditional server, in the PC. We continue, obviously, these are complex designs. As we go forward, we'll continue with operational execution to work with our supply chain teams, our go-to-market teams, and our product teams to really execute a match-up to the best execution-wise, the supply that we have with the demand shaping that we see. The teams have obviously executed that tremendously in Q1. We'll look to do the same as we head into the back half of the year. The demand is there, as Jeff said. That's what we're looking at. We'll continue to look for more supply. We would like more supply.
The team will continue to go execute and go chase the pipeline that Jeff referenced earlier, which continues to be in very healthy shape.
Paul Frantz — Head of Investor Relations, Dell Technologies Inc
Thanks, Amit.
Amit Daryanani — Analyst, Evercore
Thank you.
Wamsi Mohan — Analyst, Bank of America
Yes, thank you so much. Very impressive set of results here. I guess if we think about the comment you made on the call, I think you said customers are prioritizing securing supply, and that is something that you expect will continue for the remainder of the year. In this kind of an environment where you just noted that demand is extremely strong, what's your take on the magnitude of the variation in IT budgets for this year? Do you think that some of this is coming out of the budgets for next year as well on the enterprise side? I'm also curious on the traditional servers, I think, Jeff, you mentioned how agentic AI is maybe changing the usage. Is there a materiality of this to Tier 2 CSPs as well?
You noted enterprise strength, but kind of curious if Tier 2 CSPs could be a potential offset to maybe any change in linearity of demand at enterprise. Thank you.
Jeff Clarke — Vice Chairman and COO, Dell Technologies Inc
Wamsi, I can't speak to next year and budgets for customers. Clearly the longer-term conversations we're having with customers are multi-year in nature of how they secure supply to provide their growth and upgrade their infrastructure. The discussions are multi-year in nature, think three, four, five years. Those discussions are underway, and it really is about access to supply because quite honestly, I can't tell them what the price is going to be. It's arrangements and agreements that we're working with large customers to ensure they have what they need to grow their businesses. We saw that occur across some of the largest enterprises around the world. Our pipelines indicate that's going to continue with the next set of customers and the next set of customers before that, which is breaking the historical norms of pipeline build within the quarter and the out quarters.
Our pipelines are good two quarters out. What was really interesting about traditional servers as an example, is we saw the pipeline grow in quarter greater than historical norms. We saw the two quarters out pipelines grow. It's showing more customers looking to get access to the technology. We're seeing budgets grow. We're seeing budgets shift. Obviously, we're one quarter into the year. We'll see how the second half plays out. I think that's part of the prudence that we're trying to convey of where's the demand signal. The demand that we see continues to be robust. We in the supply chain have to go find more parts for the businesses and for our customers to fulfill that demand. I hope that helps.
David Kennedy — CFO, Dell Technologies Inc
I'd add maybe a couple of things, Jeff. I think as we talk about demand outpacing supply in that environment, we would expect to exit the year with meaningful backlog as we enter next year. I think that's an important point. The other piece would be from our financing and DFS element, which again, is a competitive advantage for us. We're engaged with many customers who in normal course of business would not need to take advantage of financing offerings, but the opportunity to partially use our facility to get as much gear in their environments in year to manage their potential budget issues is a great way to balance that, and we're seeing double-digit origination growth across our CSG business, our traditional server business, our storage business, as well as AI, which you'd expect.
We're seeing different ways we can help our customers get as much technology into their environments as quick as we can.
Wamsi Mohan — Analyst, Bank of America
Thank you so much.
Paul Frantz — Head of Investor Relations, Dell Technologies Inc
Thanks, Wamsi.
Katherine Murphy — Analyst, Goldman Sachs
Thank you for the question. I was wondering if you could further talk to the raised full year guidance for AI servers to $60 billion, and where across your customer base, the 5,000 customers you mentioned, you're seeing that $10 billion of incremental opportunity for the fiscal year. As a follow-up, how much capacity can you support in the AI server space with your current manufacturing partners? Thank you very much.
David Kennedy — CFO, Dell Technologies Inc
A strong start to the year, Kath, $16.1 billion of shipments, $24.4 billion of orders. Our backlog now sits at $51.3 billion. Just 90 days into the quarter, we're raising our full year guide by $10 billion. We'll continue to work through those deployments as we match up our supply. Obviously, these are complex designs that we're engaged on. We're actively involved in the technology transition as we get ready for Vera Rubin, working with all these customer bases in relation to data center readiness, and making sure they can receive the product. As you look at our portfolio, it's expanding and growing across all our verticals, whether that's neoclouds, our sovereign relationships, our enterprise customers. You would've heard Michael last week at Dell Technologies World talk about our 5,000 customers, which is up over 50% in the last six months.
You can see the traction that's coming, and I guess the other data point I'd add is as we look at our pipeline over the next five quarters, that's multiples of our backlog and it's growing across each individual vertical there, again, across neoclouds individually, sovereign individually, and the enterprise space. It's broad-based and it's prevalent either geography-wise or vertical-wise.
Jeff Clarke — Vice Chairman and COO, Dell Technologies Inc
On capacity.
David Kennedy — CFO, Dell Technologies Inc
Yeah, we have the capacity.
Jeff Clarke — Vice Chairman and COO, Dell Technologies Inc
Well, there's no capacity issue, it's parts.
David Kennedy — CFO, Dell Technologies Inc
It's parts.
Jeff Clarke — Vice Chairman and COO, Dell Technologies Inc
Supply.
David Kennedy — CFO, Dell Technologies Inc
Supply.
Paul Frantz — Head of Investor Relations, Dell Technologies Inc
Thanks, Kath.
Katherine Murphy — Analyst, Goldman Sachs
Thank you.
Samik Chatterjee — Analyst, JPMorgan
Hi. Thanks for taking my question, congrats from my side as well on the strong results here. Maybe just to focus on one specific comment that you made in your prepared remarks, where the gross margin outlook for the year ex-AI is better than you had 90 days ago. If you can just flesh that out a bit more in terms of, is that a function of price increases that you've been able to take, or is that a function of the sort of mix of products that you're now selling or where customer demand is focused relative to what you envisioned 90 days ago? Just curious to hear what's driving that better outlook there. Thank you.
David Kennedy — CFO, Dell Technologies Inc
Yeah, sure, Samik. I think it starts with our Dell IP storage portfolio. We've taken up our revenue guide not only for Q2 but also for the back half of the year. We're seeing our Dell IP portfolio resonate in the marketplace, whether that's the unstructured product from a PowerStore perspective in the mid-range. All of that obviously drives from a Dell IP mix perspective, tailwinds from a margin perspective, and array perspective. On the other elements of the business, both CSG and traditional server, we've made the commitment to make sure we sustain our margin rates. We see a path to that. We will continue to manage that as we see the growth. You put that basket of goods together from a core business perspective, and you see the lift in the overall margin rate as a result.
Paul Frantz — Head of Investor Relations, Dell Technologies Inc
Thanks, Samik.
Samik Chatterjee — Analyst, JPMorgan
Thank you.
Asiya Merchant — Analyst, Citigroup
Great. I'll add my congrats here, too. Thank you for taking my question. If we could just talk a little bit about the attach rates that you're seeing for the AI servers, especially as you're talking about greater enterprise demand here. You talked about 5,000 customers now. That's up from where it was a quarter ago. If you could just flesh out how you're seeing that attach rate for storage and services, and is the recent uptick in Dell IP storage a function of attach to AI servers as well as on services, if you could just comment on that, and how that fleshes out into the margin outlook for AI servers. I think I heard maintaining a mid-single-digit margin outlook for AI servers. Thank you.
Jeff Clarke — Vice Chairman and COO, Dell Technologies Inc
Sure. Lots into the question. We'll start with the broader topic of we are increasing the amount of storage and services that we're providing AI customers. Michael made reference at Dell Technologies World last week with our unstructured data solutions, the portfolio of products, and how we had won across several major customers, which I think are important bellwethers of what's changing in the marketplace and how our products are being perceived. We are making progress with our AI customers, neoclouds, Sovereigns, the high-frequency traders, and some of the biggest technology companies in the world, semiconductor companies in the world, where we are selling more storage, more Dell IP storage, in fact, only Dell IP storage. You're seeing it in our work. Our unstructured portfolio of products had its best quarter in demand ever.
Unstructured data is the data set that feeds the beast, so to speak, in AI. That's where we're seeing the greatest growth and making the most traction. If you think about the portfolio broadly, David mentioned five straight quarters of growth of Dell IP. It's five in PowerMax, it's nine in PowerStore, it's four in PowerScale, it's three in ObjectScale. Our data protection product is two. We are seeing the entire portfolio gain momentum, a combination of more competitive products designed for the AI era. I would point to Lightning as being an example of an AI parallel file system specifically designed for this class of devices and customers. We're seeing increased traction. We're certified across NVIDIA's stack.
We are engineering with them on how to make data ingest and data management and the whole data estate easier for enterprises to adopt to accelerate their AI needs. Quite frankly, we're in an era where architecture matters more than it ever has. I think of our PowerStore Elite product. We get real excited. We had fun with this last week at Dell Technologies World. It's got 3x the performance of its predecessor, 1.5 million IOPS, 6:1 data reduction. Buy one petabyte of raw storage, store six petabytes of data. I think about it's 70% faster in reads. It's got 4x more throughput. I think about the exascale storage we built purposely for this class of customers. I think about the rack scale architecture that Arthur talked about last week on stage, where we talk about the role of storage, networking, compute coming together, driving more performance.
I think about what's happening in the world of data protection where architecture matters again in 75:1 compression rates. Ultimately, our fundamental architecture that drives fewer servers and fewer SSDs to store equivalent amounts of information versus our competitors. All of that is being packaged up and presented to our entire customer set and then specifically targeted to our AI customers. Whether it's sovereign, whether it's a neocloud or an enterprise, and we're seeing traction. Optimistic, not claiming victory here. We have a lot of work to do. We're committed to the space. If you look at the payload that we delivered at DTW last week, it was the biggest and broadest storage payload we've ever brought out at any given time, and there's more to come.
Using AI inside our R&D organizations, we are delivering larger payloads in shorter periods of time, and storage is the primary vehicle to deliver that through. I hope that gives a sense, and obviously we're still seeing one of the differentiators we have in the marketplace is services, our ability to deploy service product, keep up times greater than anyone else, continues to be a differentiator in the marketplace and we'll continue to invest in that broadly across all customers.
Paul Frantz — Head of Investor Relations, Dell Technologies Inc
Thank you, Asiya.
Erik Woodring — Analyst, Morgan Stanley
Hey, guys. A big congrats from me on the quarter. Just an amazing result. I realize we're having a lot of conversations here about sustainability, but I'd love to maybe ask you if we could go back to last October, and knowing what you know now about the market and incremental agentic and ways that traditional servers are being used, perhaps in different ways, and your ability to take share from peers. If we went back to the October Analyst Day, how would you change that 7%-9% revenue guide and 15%+ EPS guide? Ultimately, I'm trying to get an understanding of the sustainability of what you're seeing across multiple years. I realize you might not have numbers, but I would just love your thoughts on where maybe that 7%-9% and 15%+ would go, knowing what you know today. Thank you so much.
David Kennedy — CFO, Dell Technologies Inc
Yeah, I don't think we'd work a five-year program on the Q1 earnings call. Obviously, as we go through, what we'll do is obviously validate what we're seeing. We were very keen on the back of the Q1 momentum that we see, where the growth is real, it's durable, it's accelerating, it's more broad-based, it's expanding beyond the GPU. All of those proof points, as they evolve and emerge, give us and gave us the confidence not only to take up our Q2 guide, which pretty much mirror images what we did in Q1, but also look at the second half, and build out incremental guidance across every level, whether it's PCs, server, storage, and AI. As we do that, Jeff touched on earlier, we're always pretty confident as we look out over a two and a half quarter lens in our pipeline as we do that.
The other obviously dialogue there is, as we talked about an AI pipeline over the next five quarters, building out multiples of our backlog. All of those, again, indicate that strong reference points of a broader-based demand element. Obviously core to that will be the agility for our EPS over time. That said, like I said earlier, we'll look to drive meaningful backlog as we exit this year. I think that's where we are, Erik, in terms of looking out any horizon for now.
Jeff Clarke — Vice Chairman and COO, Dell Technologies Inc
Erik, I might add the following perspective. I don't think applying historical models or historical views about the market and how it's going to act are appropriate today. We're finding new uses. The way that I get asked this, or I'll ask you this is: What's the value of adding intelligence into every workflow, every decision, every product, every customer interaction? I would assert the value is pretty darn high. That's what's been really, I think, the game changer since that October time, is what's really happened in agentic. What you're seeing are new categories of TAM expanding. You had the three microprocessor leaders talk about an expansion of CPU TAMs. Why? It's driven by agentic. What's happening in agentic? Agentic is really the movement of AI from an advisor to an operator. It's actually going to do something now. It's going to do something meaningful.
To do something, that agent needs support, just like a human needs support. That agent needs support, in this case, of a CPU. You have all of this wonderfulness that a GPU drives, but you have this work that has to be done around IO, around branch, retries, managing state. They're very sequential. They're very serial in nature as a result of that. That's a workload that's for the CPU. If you think about this notion, that's generally called a harness. If you think about that harness, the CPU runs it. It's going to make those calls, it's going to manage memory, and it's in the loop in every decision that an agent makes. We didn't know this in October.
This is a completely new marketplace that's being driven by putting intelligence in every workflow and every part of knowledge work on the planet today, and we're just beginning. Another way to describe this is the premium for computational capability, whether that be on the edge with a PC, smartphone, servers running this harness, GPUs doing magical, wonderful work creating all of this great value, just continues to grow at a rate we've never seen, and it's pulling the rest of the ecosystem. That's what we see. If I go for the trifecta here, all of that stuff's got to be stored. It needs high-performance storage to be able to ultimately have a receipt of what the agent is doing so it can be corrected, you can understand what it did. That's where we're at.
I don't know how we would've predicted that in October, and today I can't sit here and tell you how big the TAM is other than I know it's bigger, it's growing, and we're in the early innings of it.
Paul Frantz — Head of Investor Relations, Dell Technologies Inc
Fantastic.
Erik Woodring — Analyst, Morgan Stanley
Amazing. Thank you.
David Vogt — Analyst, UBS
Great. Thanks, guys, for taking my questions. Jeff, I appreciate all the detail, and David on servers and storage. I want to ask a question on CSG. Obviously, strong performance, taking market share, but can you expand on how you drove profitability dramatically, both sequentially and year-over-year? Going back and thinking through the best margin I've seen in the PC industry, it was probably not 8%. Just given the drop-through, it looks like over 25% drop-through, how do we think about what's driving that? How much is price versus maybe low-cost inventory? How do we think the PC margins trends longer term? Do we go back to your normal historical long-term range that you talked about at the Investor Day? Just how do we think about where the market is in your competitive positioning from a pricing and margin perspective? Thanks.
Jeff Clarke — Vice Chairman and COO, Dell Technologies Inc
Hey, look, Dave and I will tag-team this. I think the way to look at this, clearly, we benefited from tremendous scale in the business. David made reference that the operating expense as a % of revenue was down, I believe, 300 basis points on a year-over-year basis. Actually, a sequential basis.
David Kennedy — CFO, Dell Technologies Inc
600 basis points.
Jeff Clarke — Vice Chairman and COO, Dell Technologies Inc
Yeah, 600 basis points on a year-over-year basis. On a sequential basis, 300. Well, that's powerful in a business like the PC business. We also told you in our last earnings call, we were purposely late in making a price move because we wanted to build momentum with volume. We did. We took share in Q4. In Q1, we purposely moved the price in earlier as we got our Q2 cost. I think about what we're doing today, we probably moved a little too early in retrospect. We saw that temper a little bit of demand in the transactional business consumer, small and medium business, and we're looking to find the right optimum place for that, which is reflected in our go-forward guidance of operating margins for the PC business. I mentioned we had TRU uplift. TRU uplift drives more profit. I mentioned that we had greater peripherals attach and service attach.
That drives profitability in the business. That's the package. We are not operating at COVID margins. Far from it, in fact. If you go back to the operating margins in that era, they were at this range or slightly better. We're benefiting from the tremendous scale of the Dell company, a discipline in pricing, that we're working to find the right optimum balance, particularly in that transactionally-oriented side of the marketplace, consumer, small and medium business. Large deals are done deal by deal. We like what we're doing. We think we don't have it perfect yet. Still trying to find the right balance, but I'm optimistic.
Paul Frantz — Head of Investor Relations, Dell Technologies Inc
All right. Thanks, Erik.
Tim Long — Analyst, Barclays
Thank you. A two-parter, if I could, hopefully both quick on the more traditional enterprise business. First, you talked a lot about storage. Just curious with traditional server guided to 60% for the year and storage mid-single digit, does that mean that we could see a longer pull-through or tail to storage as we look out a little bit further? Secondly, you guys navigated the price increases very well. You've touched on that as well. Just curious in your past history with this, if we do get another uptick that's meaningful in the next several months or quarters, does it get harder to push pricing through another time, or is it similar, the dynamic that you think you've seen over the last quarter or two? Thank you.
David Kennedy — CFO, Dell Technologies Inc
Tim, I guess a couple of things in there. First, if you look at our guide for the full year, again, I go back to the dynamic that we referenced earlier. When you look at our second half growth in the plan, it's still, if you like, inhibited by the supply that we can get. The demand is there. The demand is outpacing the supply. That applies to across our ISG business as we look at that. The other element, I think we discussed this 90 days ago, as you look at our Dell IP mix in terms of our storage portfolio, we continue to do that crossover with the historical business, we get more Dell IP versus third party. By the end of this year, that stops becoming any relevant element of our bridge in relation to that.
Seeing growth in storage on a consistent basis and building that trend is something that excites us from a P&L perspective as we move forward and as we go execute that piece of it.
Jeff Clarke — Vice Chairman and COO, Dell Technologies Inc
On the pricing side, Tim, we're repricing it feels like every day, and I'm sure our customers feel that pain. Unfortunately, I don't see that changing given the world that we're living in today, where you have an inflationary environment, whether it's fuel, whether it's raw materials, whether that's DRAM, whether that's NAND, CPUs. We are living in an inflationary environment that is changing at a rate that obviously we've never seen before, and everything that we see suggests that continues. There'll be a point where some customers, it's enough, and they'll wait it out, and we're seeing that in some cases. In other cases, we're seeing an acceleration, that notion that was called out earlier, where folks are trying to secure that supply now and over multiple years because it's going to be more constrained.
Tim Long — Analyst, Barclays
Okay. Thank you very much.
Paul Frantz — Head of Investor Relations, Dell Technologies Inc
Thanks, Tim.
Simon Leopold — Analyst, Raymond James
Great. Thank you. Appreciate it. Wanted to come back to the risks and the supply constraints in that I think everybody understands memory at this point, but I'd like to get a sense from you as to what other elements or factors are limiting any upside beyond the memory constraint, and I'm thinking about things like printed circuit boards, et cetera. Just help us understand sort of the rank orders. Appreciate it.
Jeff Clarke — Vice Chairman and COO, Dell Technologies Inc
Sure, Simon. Yeah, I called out the three that we're spending a tremendous amount of time on. Obviously, NAND and DRAM, microprocessors. If you went down the list, next it's likely hard drives. You go down the list beyond that, there's lots of things. If you look at what's happening in the semiconductor network, you're seeing utilization of the trailing nodes beginning to fill at greater rates. Leading-edge node stuff is fully allocated. Lead times are a year.
All of those are pressured, but the most pressure comes across the four that I described in the first three, primarily, of DRAM, NAND, CPUs, then hard drives, and then ultimately the basket of goods that sit around that. Our supply chain has clearly worked through this. This is what we do. Never run out of parts. Got a salesforce that's out selling lots with a demand and pipeline that looks very encouraging that we tried to convey through the call. We have our work cut out for us to work with our partners to drive more supply, and every bit and byte matters. Every microprocessor matters, and that's what we all try to do every day.
Paul Frantz — Head of Investor Relations, Dell Technologies Inc
Thanks, Simon. We'll take one more question.
Krish Sankar — Analyst, TD Cowen
Yeah, hi. Thanks for taking my question. Jeff, again, congrats on an amazing result. I just wanted to find out, on your servers, is there a way to think about what is the mix of x86 versus Arm, does it matter to you, or is there any margin differential between those two architectures from a Dell standpoint?
Jeff Clarke — Vice Chairman and COO, Dell Technologies Inc
Traditional servers are x86 today. We're excited about the opportunity with Vera in the future, particularly as we talk about these advanced workloads that drive increasingly more computational need. Running this harness, the CPU managing this scaffolding around every GPU call is going to be more performant, and there'll be more choice here, more opportunity. We need the relief of microprocessors. We're excited about that. On the GPU side, if my memory serves me right, it's biased towards Arm. When you think about the big GB200, GB300, obviously heading towards Vera, you think about direct liquid cooling, the large deployments biased towards Arm. If you think about Enterprise AI think B200, B300, RTX 6000 Pro, you think those x86.
Paul Frantz — Head of Investor Relations, Dell Technologies Inc
Thanks, Krish.
Krish Sankar — Analyst, TD Cowen
Thank you.
Paul Frantz — Head of Investor Relations, Dell Technologies Inc
Jeff, we'll turn it over to you for the close.
Jeff Clarke — Vice Chairman and COO, Dell Technologies Inc
Thanks, Paul, thanks, everyone, for joining us today. Q1 was an exceptional start to FY 2027, highlighted by strong execution across ISG and CSG and continued momentum in AI. As we look to Q2 and into the second half, our pipeline indicates demand is not slowing but accelerating and meaningfully outpacing supply as customers prioritize securing the infrastructure they need across AI, traditional compute, storage, and PCs. Reflecting that strength, we raised our FY 2027 revenue and EPS guidance by approximately $27 billion and $5 respectively. We are operating with discipline in a challenging supply environment, scaling the business, and continuing to return capital to shareholders. We feel very good about our position, our momentum, and our ability to create long-term value. Thanks again for joining us today.