Mirror Review
November 26, 2025
For decades, Dell Technologies was best known for laptops and desktops that filled homes, offices, and classrooms.
But the latest Dell Q3 FY26 earnings show a different story about what the company is becoming. Dell reported:
- 5% growth in commercial client revenue
- Stable profitability in its PC segment
- 7% drop in consumer PCs
But the real growth core is something different.
Dell Technologies reported $12.3 billion in AI server orders in Q3, a record figure that confirms the company is no longer defined by the PC market alone.
The Dell AI Server business is now the company’s most important engine.
This shows a reorientation toward AI infrastructure, high-performance clusters, and large data center deployments that support the new era of computing.
AI Infrastructure Has Become Dell’s Growth Engine
Dell’s infrastructure business (ISG) delivered the strongest performance in the quarter.
- Servers and networking revenue reached $10.1 billion, up 37% year over year.
- ISG total revenue rose to $14.1 billion, marking 24% growth.
These increases outpaced nearly every major enterprise technology category this year.
The standout figure is the $12.3 billion AI server bookings in Q3, which helped push Dell’s year-to-date AI orders to $30 billion.
Furthermore, Dell expects AI server shipments to grow 150% for the full fiscal year, reaching $25 billion by year-end.
Vice Chairman and COO Jeff Clarke summarized this turning point by saying, “AI orders were again a highlight. We have now delivered over twenty billion in AI server revenue year to date.”
His comment reflects how quickly the Dell AI Server segment has overtaken legacy segments.
Dell’s AI pipeline also offers stability ahead. The company expects its AI server pipeline to span five quarters and be multiple times larger than its current backlog of $18.4 billion.
This suggests that the present quarter is not just a peak but part of a long, sustained demand cycle.
Why AI Servers Are Taking Over Dell’s Identity
- Global AI buildout:
Companies across cloud, enterprise, telecom, and sovereign sectors are racing to build compute capacity.
Dell’s ability to deliver custom-built clusters fast has become a competitive advantage.
- Higher average deal sizes:
AI infrastructure deals often involve hundreds or thousands of GPUs, making each contract substantially larger than traditional server refresh cycles.
- PC market stagnation:
Consumer PC crashed 7% to $1.86 billion, reflecting saturation and longer device replacement cycles.
Dell’s commercial PC revenue held at $10.6 billion, but the real growth opportunity clearly lies outside traditional PCs.
- Better alignment with industry trends:
The next decade of enterprise technology spending will focus on AI compute, data center modernization, high-performance networking, and storage optimized for large model training. Dell is positioning itself ahead of that curve.
Altogether, these drivers explain why the Dell AI Server category is now overshadowing the company’s original identity as a PC manufacturer.
Strong Profitability Even as the Product Mix Shifts
Despite the shift toward hardware that traditionally carries lower margins, Dell still delivered its strongest Q3 profitability in years.
Key details from the report include:
- Operating income grew 23% year over year to $1.8 billion.
- EPS rose 39% year over year to $1.98.
- Operating expenses dropped 5% year over year due to tight cost discipline.
CFO Yvonne McGill explained, “We continued to execute well in a mixed environment, with our operating income growing 23% and EPS increasing 39%.”
This shows that the pivot toward AI servers is not just driving growth but also supporting profitability, even with margin pressures.
The Real Strategic Shift: Infrastructure Now Surpasses PCs
Historically, Dell’s PC business (CSG) was its largest revenue contributor. But this quarter marks a strategic milestone. ISG revenue of $14.1 billion has overtaken CSG revenue of $12.5 billion.
This is a long-term transition where:
- Infrastructure becomes Dell’s core business.
- PCs become a stable but secondary segment.
- AI servers anchor future growth and valuation.
This transition mirrors the broader trend in enterprise tech, where companies like NVIDIA, AMD, HP Enterprise, and Lenovo are also prioritizing AI infrastructure.
Moreover, Dell’s scale and decades of hardware engineering put it in a favorable position to compete in this new landscape.
What This Means for Dell’s Future
Based on current Q3 FY2026 Dell earnings and industry trends, the likely trajectory is clear.
- Dell will deepen its specialization in AI-focused data center hardware
Expect more investments in:
- GPU-dense server lines
- AI-optimized networking
- Liquid cooling and high-density racks
- Partner ecosystems with NVIDIA, AMD, and Qualcomm
- AI orders will continue to outpace traditional IT spending
It will be driven by global LLM adoption, private AI data centers, and sovereign cloud programs.
- Shareholder returns remain strong
Dell returned $1.6 billion to shareholders in Q3 and $5.3 billion year to date. As AI revenue grows, Dell is likely to sustain these returns.
- PCs will remain stable but not central
Commercial PCs will continue to perform well, but the company’s strategic focus is shifting to where the long-term growth is: large-scale computing.
Dell is essentially betting that AI infrastructure will define the next decade of enterprise technology spending.
Conclusion
The Dell Q3 2026 results show that the Dell AI Server boom is not a trend or a temporary spike.
With $12.3 billion in quarterly AI orders and long-term demand ahead, Dell has stepped into a new role in the tech ecosystem.
Dell is now an AI infrastructure company that still sells PCs, not the other way around.
As AI adoption accelerates globally, Dell’s transformation will likely shape its next ten years of growth and valuation.
