DELL Gains From AI and Data Center Growth: A Sign for More Upside?

Dell Technologies DELL is benefiting from the rapid growth in AI and data center demand, which has become a key growth driver of its financial performance.  In the second quarter of fiscal 2026, Dell Technologies achieved record revenues of $29.8 billion, up 19% year over year, with its Infrastructure Solutions Group (ISG) revenue surging 44% to $16.8 billion.

This growth was largely fueled by the company’s strong performance in AI servers, where it shipped $8.2 billion worth of products and booked $5.6 billion in new orders during the second quarter of fiscal 2026.

Dell Technologies' ability to innovate and deliver turnkey solutions, such as the NVIDIA RTX Pro 6000 AI Factory, positions it as a leader in the AI hardware market.  Additionally, its focus on modernizing data centers with next-generation servers and storage solutions further strengthens its competitive edge.

The company’s expanding portfolio has been noteworthy. In May 2025, Dell Technologies introduced advanced storage, cyber resiliency and automation innovations to enhance modern disaggregated data centers across cloud, edge, and on-premises environments.

Dell Technologies has increased its full-year fiscal 2026 AI server shipment forecast to $20 billion, showing confidence in ongoing demand. AI hardware and services are expected to create a $350 billion market by 2028. The company’s strength in servers, storage and AI-optimized solutions sets it up for continued growth.

DELL Faces Stiff Competition

Dell Technologies is facing stiff competition from Hewlett Packard Enterprise HPE and Cisco Systems CSCO, which are also expanding their footprints in AI infrastructure and data center modernization.

Hewlett-Packard Enterprises’ expanding portfolio has been noteworthy. In August 2025, Hewlett Packard Enterprise introduced innovations to its HPE Juniper Networking portfolio and AI-native Mist platform. These included agentic AI-powered troubleshooting, expanded control of autonomous actions, a generalized Large Experience Model and improved AIOps features for data centers. These updates aim to simplify IT operations and improve user experiences.

Cisco Systems is benefiting from its partnership with NVIDIA. The integration of Cisco Systems Nexus switches with NVIDIA’s Spectrum-X architecture is offering low-latency, high-speed networking for AI clusters, driving enterprise AI orders. The Cisco Secure AI factory, in collaboration with NVIDIA, provides a trusted blueprint for building secure AI-ready data centers for enterprises, sovereign cloud providers, and newly emerging Neocloud providers.

DELL’s Share Price Performance, Valuation, and Estimates

DELL’s shares have gained 17.4% year to date, underperforming the broader Zacks Computer & Technology sector’s return of 22.4%. However, it has outperformed the Computer - Micro Computers industry, which has declined 1.5% in the same time frame.

DELL Stock's Performance

DELL shares are cheap, with a forward 12-month Price/Sales of 0.80X compared with the Computer & Technology sector’s 7.10X. DELL has a Value Score of A.

Price/Sales (F12M)

The consensus mark for fiscal 2026 earnings is pegged at $9.54 per share, which has increased 0.73% in the past 30 days. This suggests 17.20% year-over-year growth.

Dell Technologies Inc. Price and Consensus

Dell Technologies Inc. price-consensus-chart | Dell Technologies Inc. Quote

DELL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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