Can Dell Leverage the AI PC Wave to Drive Growth in Its Client Solutions Division?

The competitive landscape for personal computers is undergoing a significant shift as artificial intelligence capabilities become central to device differentiation. Dell Technologies DELL is strategically positioned to capture substantial market opportunities through its Client Solutions Group (CSG), fueled by multiple structural tailwinds including the AI PC proliferation and the ongoing Windows 11 transition.

Multiple Drivers Propelling CSG Revenue Expansion

Dell’s CSG segment demonstrated robust momentum in fiscal 2026’s third quarter, posting revenues of $12.47 billion, up 3% year-over-year. The commercial division, in particular, sustained its growth trajectory across five consecutive quarters, climbing 5% to reach $10.6 billion. Consumer-facing revenue, meanwhile, reversed a three-year decline, signaling renewed market appetite.

Two primary catalysts are propelling this expansion. First, the incomplete Windows 11 migration presents a massive addressable market—approximately 500 million devices currently capable of running Windows 11 remain unupgraded, while another 500 million machines in active use cannot support the operating system due to age. This dual dynamic creates a compelling refresh opportunity for Dell to capitalize on enterprise and consumer upgrade cycles.

Second, the emergence of AI-capable personal computers featuring neural processing units (NPUs) is reshaping buyer preferences. These machines deliver enhanced computational efficiency and enable local AI model execution, addressing growing demand for smarter, more responsive computing environments. Dell’s ability to serve both segments—traditional performance seekers and AI-forward buyers—positions the company to drive market share gains even as the broader PC sector faces headwinds.

Competitive Pressures and Market Positioning

Despite these tailwinds, Dell confronts intensifying competitive challenges. HP HPQ has accelerated its AI PC roadmap, with AI-capable machines representing over 30% of shipments in its fourth quarter fiscal 2025—a milestone achieved one quarter sooner than anticipated. These premium-priced devices command 5-10% pricing advantages relative to conventional machines, bolstering both revenue and profitability metrics.

Apple AAPL similarly demonstrates formidable momentum through its Mac segment. Fourth quarter fiscal 2025 Mac sales surged 12.7% year-over-year to $8.5 billion, constituting 8.5% of total corporate revenue. The introduction of M5-powered 14-inch MacBook Pro and refreshed iPad Pro models with advanced processors underscores Apple’s commitment to maintaining premium device positioning.

Valuation Assessment and Forward Outlook

Dell’s equity performance tells a mixed story. Over the trailing six-month window, DELL shares appreciated 22.1%, trailing both the broader Zacks Computer & Technology sector (26.2%) and the Computer - Micro Computers industry cohort (36.5%).

From a valuation standpoint, Dell appears attractively priced. The forward 12-month Price/Sales multiple sits at 0.75X against the sector average of 6.79X, earning a Zacks Value Score of A, indicating significant discount to peers on a top-line basis.

Earnings consensus for fiscal 2026 projects $9.89 per share, reflecting a 3.6% upward revision over the past month and implying 21.5% year-over-year expansion. Currently rated Zacks Rank #3 (Hold), Dell’s trajectory will hinge on execution against AI PC adoption rates and the pace of the Windows 11 upgrade cycle relative to competitive alternatives.

While the aggregate PC market faces near-term pressure, with flat year-over-year expectations, Dell’s dual exposure to legacy system replacement and next-generation AI device demand positions the company to drive incremental value creation within this maturing category.