Dell's ISG Revenue Growth Strengthens: Will the Momentum Continue?

Dell Technologies DELL is witnessing strengthening momentum in its Infrastructure Solutions Group (ISG), which has emerged as the company’s key growth driver. The segment is benefiting from accelerating demand for AI infrastructure and ongoing enterprise data center modernization. The segment reported record revenues of $19.6 billion in the fourth quarter of fiscal 2026, up 73% year over year, while full-year revenues increased 40% to $60.8 billion, highlighting strong uptake of Dell’s server and storage portfolio.

A key catalyst behind this momentum is Dell’s fast-growing AI server segment. Growing enterprise demand for AI infrastructure is accelerating the adoption of the company’s high-performance server solutions. Dell reported $9 billion in AI-optimized server revenues in the fourth quarter. For fiscal 2027, it expects AI revenues to reach approximately $50 billion, implying nearly 100% year-over-year growth. A record AI backlog of $43 billion and strong order momentum support clear revenue visibility ahead.

Traditional servers and networking continue to play an important role in Dell’s business, supported by enterprise investments to upgrade infrastructure for higher computing workloads and AI adoption. At the same time, the company’s storage platforms — including PowerMax, PowerStore and PowerScale — are seeing steady demand as organizations modernize their systems and manage growing data volumes.

These trends highlight ISG as DELL’s key growth driver. As enterprises expand AI deployments and modernize data centers, the segment is likely to support continued revenue growth. The Zacks Consensus Estimate projects year-over-year total revenue growth of 24.2% in fiscal 2027, supporting continued momentum.

Dell’s AI Infrastructure Push Faces Tough Rivals

Dell is a major player in the AI infrastructure market but faces stiff competition from Super Micro Computer SMCI and Hewlett Packard Enterprise HPE.

Super Micro Computer is strengthening its position in the AI infrastructure market through its vertically integrated design approach and rapid time-to-market capabilities. Its Data Center Building Block Solutions platform enables faster AI data center deployment while improving power efficiency and operational costs. Strong engineering expertise, modular system design and automated manufacturing further enhance scalability. Close collaboration with NVIDIA and AMD, along with expanding global manufacturing capacity, supports SMCI’s ability to deliver high-performance AI infrastructure at scale.

Hewlett Packard Enterprise is strengthening its AI infrastructure position with an integrated portfolio spanning AI servers, networking, hybrid cloud and storage solutions. The company supports large-scale AI training and inference workloads with high-performance computing platforms and AI-optimized systems. HPE’s Juniper Networks integration enhances AI-native networking capabilities, while its GreenLake platform and AI factory architecture help enterprises deploy, manage and scale AI workloads efficiently across modern data center environments.

DELL’s Share Price Performance, Valuation & Estimates

Shares of Dell have gained 16.8% year to date, outperforming the broader Zacks Computer & Technology sector and the Zacks Computer - Micro Computers industry’s decline of 3.4% and 2.7%, respectively.

DELL’s YTD Price Performance

From a valuation standpoint, its forward price-to-earnings ratio of 13.01 is significantly below the industry’s average of 28.92.

DELL’s Valuation

The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $11.72 per share, increasing 3.9% over the past 30 days. This suggests 13.79% year-over-year growth.

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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