Will Dell's ISG Segment Benefit From Cloud Infrastructure Expansion?
Dell 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 cloud and AI offerings. Microsoft Cloud revenues reached $42.4 billion, growing 21% year over year and 22% in constant currency in the third quarter of fiscal 2025. Azure, in particular, had strong demand, especially for AI services, which contributed significantly to the cloud's performance. In the reported quarter, Azure and other cloud services revenues grew 33% (up 35% in cc), including 16 points from AI services.Alphabet is riding on strong cloud growth. Google Cloud is benefiting from accelerated growth across AI infrastructure, enterprise AI platform Vertex and strong adoption of Generative AI solutions. In first-quarter 2025, Alphabet's Google Cloud revenues increased 28.1% year over year to $12.26 billion. Google's growing investments in infrastructure, security, data management, analytics and AI are positive.
DELL's shares have gained 4.9% year to date, outperforming the broader Zacks Computer & Technology sector's return of 3.7%.
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DELL stock is trading at a premium, with a forward 12-month Price/Sales of 0.77X compared with the Computer & Technology sector's 6.45X. DELL has a Value Score of B.
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The Zacks Consensus Estimate for second-quarter fiscal 2026 earnings is pegged at $2.26 per share, which has increased 7.1% in the past 30 days. This indicates a year-over-year increase of 19.58%.
Dell Technologies Inc. price-consensus-chart | Dell Technologies Inc. Quote
The consensus mark for 2025 earnings is pegged at $9.43 per share, which increased 2.6% in the past 30 days. This suggests 15.85% year-over-year growth.DELL currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
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