DELL's ISG Growth Accelerates: Is AI Infrastructure the Catalyst?

Group 1: Company Performance - Dell Technologies is experiencing accelerated growth in its Infrastructure Solutions Group (ISG), achieving record revenues of $16.8 billion in Q2 of fiscal 2026, representing a 44% year-over-year increase and six consecutive quarters of double-digit growth [1][10] - The company shipped $8.2 billion in AI servers during the same quarter and raised its full-year AI server shipment guidance from $15 billion to $20 billion, indicating sustained demand for AI-driven solutions [2][10] - Dell's shares have gained 10.1% year to date, underperforming the broader Zacks Computer & Technology sector's return of 18.8%, but outperforming the Computer - Micro Computers industry, which has declined 6.1% [8] Group 2: Strategic Developments - Dell Technologies is enhancing its AI infrastructure through the Dell AI Factory in collaboration with NVIDIA, introducing improved data management, software, and managed services to accelerate enterprise AI adoption [3][4] - The company is expanding its partner base, including collaborations with Nvidia, AMD, and Meta, which strengthens its ecosystem and positions it to capture a significant share of the projected $350 billion AI infrastructure market by 2028 [4] Group 3: Competitive Landscape - Dell Technologies faces stiff competition from companies like Applied Materials and Cisco Systems, both of which are also expanding their presence in the AI infrastructure space [5] - Applied Materials has signed transformative 15-year lease agreements with CoreWeave to deliver 250 megawatts of critical IT load, expected to generate approximately $7 billion in contracted revenues [6] - Cisco Systems has integrated AI into its product portfolios and received AI infrastructure orders exceeding $2 billion from web-scale customers in fiscal 2025 [7] Group 4: Valuation and Earnings Estimates - Dell's forward 12-month Price/Sales ratio is 0.77X, significantly lower than the Computer & Technology sector's 6.91X, indicating that Dell shares are considered cheap [11] - The consensus estimate for Dell's fiscal 2026 earnings is $9.54 per share, reflecting a 17.20% year-over-year growth, with a slight increase of 0.95% in the past 30 days [13]