DELL Gains Traction in Cloud Infrastructure: Can it Drive ISG Revenue?

Core Insights - Dell Technologies is expanding its cloud services through its infrastructure solutions and a robust partner ecosystem that supports cloud environments [1] Financial Performance - In Q2 of fiscal 2026, Infrastructure Solutions Group (ISG) revenues, including cloud offerings, increased by 44% year over year to $16.80 billion [2] - The growth was driven by servers and networking revenues of $12.94 billion, which grew by 69% year over year, reflecting strong demand in AI and traditional servers [2] AI and Cloud Solutions - A significant driver of Dell's cloud infrastructure growth is its focus on AI-enabled cloud solutions, with AI server shipments reaching $8.2 billion in Q2 of fiscal 2026 and a $5.6 billion increase in orders [3] - Dell's AI solutions, such as the NVIDIA RTX Pro 6000 AI Factory, are designed for flexibility and power efficiency, crucial for cloud environments [4] Product Advancements - In September 2025, Dell Technologies announced advancements in private cloud infrastructure, including the general availability of Dell Private Cloud and new models like PowerStore and PowerMax QLC [5] Competitive Landscape - Dell Technologies faces strong competition in the cloud market from Microsoft and Alphabet, with Microsoft Cloud revenues reaching $46.7 billion in Q4 of fiscal 2025, a 27% year-over-year increase [6] - Alphabet's Google Cloud revenues surged by 31.7% year over year to $13.62 billion in Q2 of 2025, benefiting from AI infrastructure growth [7] Stock Performance and Valuation - Dell's shares have gained 29.9% year to date, outperforming the broader Zacks Computer & Technology sector's return of 23.1% [8] - Dell's forward 12-month Price/Sales ratio is 0.89X, significantly lower than the sector's 6.90X, indicating that the stock is undervalued [12] - The consensus estimate for fiscal 2026 earnings is $9.54 per share, suggesting a 17.20% year-over-year growth [15]