DELL Expands Cloud Infrastructure Reach: A Catalyst for ISG Growth?

Dell Technologies DELL is benefiting from the accelerating demand for cloud infrastructure, which is serving as a key catalyst for growth in its Infrastructure Solutions Group (ISG). In the third quarter of fiscal 2026, ISG revenues grew 24% year over year to $14.10 billion, marking seven consecutive quarters of double-digit growth.

Dell Technologies' AI server business is a standout contributor to its cloud infrastructure. In the third quarter of fiscal 2026, the company booked $12.3 billion in AI server orders, bringing year-to-date orders to $30 billion. The company shipped $5.6 billion worth of AI servers in the fiscal third quarter. The company ended the fiscal third quarter with a record backlog of $18.4 billion in AI server orders, highlighting the sustained demand for its AI solutions. The demand for AI servers is driven by a diverse and expanding customer base, including Neoclouds, Tier 2 cloud service providers, Sovereigns, and Enterprises.

DELL’s focus on its Dell-IP storage portfolio, including products like PowerStore, PowerMax and PowerFlex, further strengthens its cloud infrastructure offerings. These solutions aim to support data center modernization and AI workloads, meeting the needs of cloud providers. With a growing pipeline and an expanding customer base, Dell Technologies is in a strong position to capitalize on the ongoing shift toward cloud infrastructure, driving sustained ISG growth.      

Further expanding its portfolio in November 2025, DELL announced it will supply racks of NVIDIA GB300 GPUs and data center equipment to IREN to support its new AI cloud collaboration with Microsoft across four data centers in Childress, TX

DELL Faces Stiff Competition

Dell Technologies is facing stiff competition in the growing cloud market against the likes of Microsoft MSFT and Alphabet GOOGL.

Microsoft is benefiting from strong demand for Azure cloud infrastructure expansion and AI offerings. In the first quarter of fiscal 2026, Microsoft Cloud revenues were $49.1 billion, ahead of expectations, and increased 26% (up 25% in cc).

Alphabet is riding on strong cloud growth. Google Cloud ended the third quarter of 2025 with $155 billion in backlog, up 46% sequentially. The number of new Google Cloud Platform customers increased by roughly 34% year over year, and 70% of Google Cloud customers now use Alphabet’s AI products.

DELL’s Share Price Performance, Valuation, and Estimates

DELL’s shares have gained 4% in the trailing six-month period, underperforming the broader Zacks Computer & Technology sector’s return of 19.7% and the Zacks Computer - Micro Computers industry rise of 32.5%.

DELL Stock's Performance

DELL shares are cheap, with a forward 12-month Price/Sales of 0.68X compared with the Computer & Technology sector’s 6.60X. DELL has a Value Score of A.

DELL Valuation

The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $9.89 per share, which has increased 0.5% 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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