Dell Technologies (DELL) and Microsoft (MSFT) are key competitors in the cloud computing sector, providing vital infrastructure, software, and services for enterprise clients. DELL enhances cloud environments with its robust hardware and extensive partner network, while Microsoft delivers a comprehensive range of cloud services via its Azure platform, which includes advanced AI and machine learning capabilities.
According to a report by Grandview Research, the global cloud computing market was valued at $752.44 billion in 2024. This market is projected to grow at a compound annual growth rate (CAGR) of 20.4% from 2025 to 2030. Both DELL and MSFT stand to benefit significantly from this anticipated growth.
As investors seek to understand potential returns, the question arises: DELL or MSFT—who offers the greater upside in cloud stocks?
Exploring DELL Technologies
DELL is expanding its offerings through its APEX platform, which provides multi-cloud solutions and AI infrastructure.
In the fourth quarter of fiscal 2025, the Infrastructure Solutions Group (ISG) reported revenues of $11.35 billion, a 22% increase year over year. Notably, revenue from servers and networking reached $6.63 billion, growing 37% year-over-year due to strong demand for AI and traditional servers.
The demand for AI solutions remains high, with deployments extending from major cloud service providers to large-scale enterprises and edge computing applications involving PCs.
Continuous demand for AI-optimized servers, such as the PowerEdge XE9680L, is propelling Dell’s growth as enterprise interest in generative AI and digital transformation surges.
In March 2025, Dell formed a partnership with Singapore’s Institute of Technical Education to establish a hybrid cloud VDI Centre utilizing Dell VxRail. This initiative emphasizes closing the AI skills gap and enhancing digital learning through flexible, scalable infrastructure.
Assessing Microsoft
Microsoft continues to thrive in the cloud and AI sectors, reporting $42.4 billion in cloud revenues for the third quarter of fiscal 2025—a 21% year-over-year increase.
Azure’s performance benefited from heightened demand for AI services, contributing to its impressive revenue growth of 33% (35% in constant currency) in the fiscal third quarter. AI services accounted for 16 percentage points of this increase.
Key customers like Abercrombie & Fitch, Coca-Cola, and ServiceNow are expanding their Azure usage, further fueling growth. Microsoft’s Azure is becoming the preferred cloud for handling mission-critical workloads from VMware, SAP, and Oracle, supported by its expansive regional presence compared to other hyperscalers.
Additionally, Microsoft has broadened its cloud capabilities by scaling data centers, optimizing hardware, and enhancing AI workload efficiencies. Innovations like the Foundry platform, GitHub Copilot, and M365 Copilot are bolstering customer adoption and driving Microsoft’s cloud growth.
Stock Performance and Valuation of DELL and MSFT
Year-to-date, Dell Technologies shares have fallen 11.4%, while Microsoft shares have appreciated by 6.5%. Dell’s decline is primarily due to increased U.S. tariffs, especially those impacting China, coupled with the risks associated with a potential recession.
Microsoft’s performance has benefitted from its robust AI segment and the successful rollout of Copilot, alongside the accelerating growth of its Azure cloud infrastructure.
Stock Performance of DELL and MSFT
Image Source: Zacks Investment Research
At present, both DELL and MSFT shares appear overvalued, indicated by Value Scores of C and D, respectively.
Regarding the forward 12-month Price/Sales ratio, DELL’s shares trade at 0.7X, significantly lower than MSFT’s 10.82X.
Valuation Summary for DELL and MSFT
Image Source: Zacks Investment Research
Earnings Estimates for DELL & MSFT
The Zacks Consensus Estimate for DELL’s fiscal 2026 earnings is $8.90 per share, reflecting a 0.7% decline over the past month but a 9.34% increase year over year.
Dell Technologies Inc. Price and Consensus
Dell Technologies Inc. price-consensus-chart | Dell Technologies Inc. Quote
Conversely, the Zacks Consensus Estimate for MSFT’s fiscal 2025 earnings is $13.30 per share, which has increased by 1.83% in the last month, reflecting a 12.71% increase year over year.
Microsoft Corporation Price and Consensus
Both DELL and MSFT have exceeded the Zacks Consensus Estimate in all of the last four quarters. However, DELL’s average surprise of 5.13% lags behind MSFT’s 5.21%.
Conclusion
While both Dell Technologies and Microsoft are poised to leverage the significant expansion of the cloud computing market, Microsoft is emerging as the more favorable investment choice.
Microsoft’s strong positioning is supported by its rapid AI-driven cloud growth with Azure, consistent earnings momentum, and expanding enterprise adoption. Although Dell is making important developments in AI infrastructure, its growth and overall performance remain behind Microsoft in the cloud computing arena.
Currently, Microsoft holds a Zacks Rank of #2 (Buy), positioning it more favorably than Dell Technologies, which is rated #5 (Strong Sell).
This article originally published on Zacks Investment Research.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
