Dell AI Server Orders

By Patrick Moorhead - May 24, 2024

The Six Five team discusses Dell AI Server Orders

If you are interested in watching the full episode you can check it out here.

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Transcript:

Daniel Newman: We’ve been saying for a long time that Dell is misunderstood, misvalued. We obviously know the top execs there very well. We spent time, I spent time with Michael and Jeff and the leadership and I’ve had the chance to really get to understand their vision on AI and the business and our findings have been that they’re playing nice, but they’re winning. And so this week the stock actually went up to $152 a share. It was named a top pick by Morgan Stanley based on its AI server demand. But furthermore, Pat, the stock is up five fold from a year ago.

Patrick Moorhead: It’s up 100% over six months.

Daniel Newman: But I mean it was $35 or so at some point in 2023 was what it was trading at. So it has had this amazing run. They’re expected to have $10 billion in server revenue. The shares are up 99% in 2024, and they’ve seen an incredible rate of growth, only Supermicro as an OEM has done better. And so that’s basically been a byproduct of Jensen Wong walking the floor of the NVIDIA GTC event. I can’t quote him, but he basically said, and I mean is he the godfather now or what? But he basically pointed at Dell and said all the things you need to build your AI factories you can get from Dell Technologies.

So whatever they did, magical. And obviously I think next week, what is it, Michael and Jensen and Bill McDermott are getting on camera together. Maybe the only video that’s maybe a priority over a Six Five video, where by the way, Bill McDermott is going to speak and Jensen and Michael have spoken in case anybody hasn’t signed up for that yet. It’s pretty awesome, isn’t it, Pat? So Dell is there, oh, the quote in the CNBC article by the way is “Michael is here and he’s happy to take your order won.” Wong confirmed. I don’t know, Pat, great for Dell, we’re heading to Dell Tech World Sunday nights because we love working on the weekends.

Patrick Moorhead: We do. We love that. I love that.

Daniel Newman: But if we’re going to do it, we’re going to do it for the coolest and most exciting tech companies on the planet. Dell is now one of them.

Patrick Moorhead: So Dan, a year ago people were asking us, is there anything above Microsoft when it comes to this generative AI? And Google was in the mix and then they had stumble after stumble on Bard and even some of the demos were being questioned. But the big question we got was who are the next wave of people who could benefit? And the companies like IBM and companies like ServiceNow and folks like that, when it came to infrastructure, we were talking about Dell. So you have Supermicro and investors realized that’s an AI Play for the hyperscalers, but who is the AI Play for the tier two folks and the on-prem folks? And given the openness to the company to talk about that giant backlog of AI servers that they had that Jeff Clark rolled out, and then a couple quarters after it started to click in, the gear went into place, boom, here we go. And the stock is cooking and they’re being rewarded for that.

So to me, it’s a very simple equation. Dell said they were going to be part of this and then they are part of this and investors are baking that in. And if I compare, Lenovo isn’t getting as big a lift on that. HPE is going for value, not volume. So we are where we are.

Daniel Newman: Yeah, I think that’s a good assessment and I know I took a lot of the oxygen on that one, Pat, but I had fun. I tweeted something about it, got a lot of engagement on it because basically mind blown, dude, I don’t even know what to say. I mean, you and I have at times postulated about the fact that these OEMs just are, they don’t move a lot. Cisco and Dell and HPE, but Dell has absolutely separated itself right now from the pack in terms of the way the market is treating it. It landed its AI message, it did, it got it done and good for them. I mean, it showed that if you get it right and you get Jensen to give you a little bit of an anointment, you can see your stock go up 500% in less than two years. Amazing.

Patrick Moorhead
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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.