DELL Benefits From Cloud Infrastructure Expansion: More Upside Ahead?

Dell Technologies DELL is benefiting from the ongoing expansion of its cloud infrastructure business, which is driving its long-term growth. The company’s comprehensive portfolio of servers, storage and networking solutions is well-positioned to capitalize on this trend.

Building on the strength of its comprehensive portfolio, Dell is witnessing strong growth in its Infrastructure Solutions Group (“ISG”). In the fourth quarter of fiscal 2026, Dell reported record ISG revenues of $19.6 billion, which increased 73% year over year, marking eight consecutive quarters of double-digit revenue growth. This growth is largely fueled by the increasing demand for AI servers, which are integral to cloud infrastructure. Dell’s AI server revenue alone reached $9 billion in the fourth quarter, with $34.1 billion in orders and a record $43 billion backlog.

The company’s partnership with LSEG has been noteworthy. In March 2026, DELL began a multi-year partnership with London Stock Exchange Group (“LSEG”) to improve its on-premises infrastructure and build a secure, high-performance private cloud platform. The company will provide integrated servers, storage and automation solutions to create a unified infrastructure. This will support LSEG’s multi-cloud strategy and boost the resilience and performance of its Data & Analytics and Markets platforms.

Dell has seen explosive growth in AI Cloud infrastructure, recording $34.1B in AI orders in Q4, $64.1B AI orders in FY2026, a $43B backlog and $9.5B in AI server shipments in Q4. The company expects $50B in AI revenues in FY2027, nearly doubling year over year, reflecting strong demand for AI cloud capacity and multi-quarter visibility via backlog. The company highlighted rapid expansion across cloud-related customers, with more than 4,000 AI customers. Growth spans multiple segments, including Neoclouds, Sovereign clouds and Enterprises building private AI clouds. The Zacks Consensus Estimate projects revenues to increase 24.22% year over year in fiscal 2027.

DELL Faces Stiff Competition in the Cloud Infrastructure Business

Cisco Systems CSCO is a strong competitor to DELL in the Cloud Infrastructure business, which is centered on becoming a critical enabler of AI-driven cloud architectures. The company registered AI infrastructure orders from hyperscalers of $2.1 billion in the second quarter of fiscal 2026, which equals the entire AI order volume of FY2025. Cisco Systems expects $5 billion in AI orders in FY2026 and $3 billion of AI-related revenues.

Hewlett Packard Enterprise HPE is another strong competitor to DELL in cloud infrastructure, where its hybrid cloud segment registered revenues of $1.4 billion, down 13% year over year and declining 5% sequentially. The operating margin is down 5% year over year due to increased investment in new cloud solutions. Hewlett Packard Enterprise is heavily focused on private cloud as a core infrastructure model, with private cloud orders up more than 20% year over year and doubling sequentially. The company added approximately 100 new private cloud AI customers in the fourth quarter of 2025.

DELL’s Share Price Performance, Valuation & Estimates

Shares of Dell Technologies have appreciated 38.2% year to date, outperforming the broader Zacks Computer & Technology sector and the Zacks Computer - Micro Computers industry’s decline of 6.1% and 4.9%, respectively.

DELL Stock’s Price Performance

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From a valuation standpoint, its forward price-to-earnings ratio of 13.30 is significantly lower than the industry’s average of 27.83. The company carries a Value Score of B.

DELL Stock Is Undervalued

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The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $12.82 per share, increasing 0.87% over the past 30 days. This suggests 24.5% 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 #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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