DELL Gains Traction in AI PC Market: Can It Drive CSG Revenue?

Dell Technologies DELL is benefiting from the growing demand for AI-enabled PCs, which is contributing to its Client Solutions Group’s (CSG) revenue growth. In the third quarter of fiscal 2026, CSG revenues were $12.47 billion, representing a 3% year-over-year increase. Commercial revenue grew for the fifth consecutive quarter, up 5% to $10.6 billion, while consumer revenue showed signs of recovery, returning to demand growth for the first time in three years.

Another key factor driving Dell Technologies’ success in the CSG segment is the ongoing PC refresh cycle. The company’s leadership emphasized that the transition to Windows 11 is not yet finished. About 500 million PCs that can run Windows 11 are still waiting for upgrades. Furthermore, another 500 million PCs in the installed base are more than four years old and cannot run Windows 11. This creates a big opportunity for Dell Technologies to gain market share as businesses and consumers upgrade their systems.

Dell Technologies is also capitalizing on the rise of AI PCs, which feature advanced components like neural processing units (NPUs) to support AI applications and small language models.  These devices are increasingly in demand as businesses and consumers seek more capable and efficient computing solutions.

DELL’s traction in the AI PC market is proving to be a significant driver for its CSG revenue. While the company expects the overall PC market to remain flat year over year, it sees significant opportunities for growth in AI-enabled PCs and the ongoing Windows 11 upgrade cycle.

DELL Suffers From Stiff Competition

Dell Technologies suffers from stiff competition in the PC market from the likes of HP HPQ and Apple AAPL. 

HP’s strong position in the AI PC market is becoming a key driver of growth and profitability. In the fourth quarter of fiscal 2025, AI PCs accounted for more than 30% of HP’s total PC shipments, reaching this milestone a quarter earlier than expected. These devices also deliver 5-10% higher average selling prices than traditional PCs, improving revenue mix and margins.

Apple’s Mac business is benefiting from strong demand for the MacBook Air. In the fourth quarter of fiscal 2025, Apple’s Mac sales increased 12.7% year over year to $8.5 billion and accounted for 8.5% of total sales. Apple also updated its Mac and iPad portfolio with the launch of the M5 chip-powered 14-inch MacBook Pro and the new 11-inch and 13-inch iPad Pro, respectively.

DELL’s Share Price Performance, Valuation, and Estimates

DELL’s shares have gained 22.1% in the trailing six-month period, underperforming the broader Zacks Computer & Technology sector’s return of 26.2% and the Zacks Computer - Micro Computers industry rise of 36.5%.

DELL Stock Performance

DELL shares are cheap, with a forward 12-month Price/Sales of 0.75X compared with the Computer & Technology sector’s 6.79X. DELL has a Value Score of A.

Price/Sales (F12M)

The consensus mark for fiscal 2026 earnings is pegged at $9.89 per share, which has increased 3.6% over the past 30 days. This suggests 21.50% 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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