Talking Dell, Microsoft, IBM, Special Guest, NVIDIA, Lenovo, Synopsys

By Patrick Moorhead - May 28, 2024

On this episode of The Six Five Webcast, hosts Patrick Moorhead and Daniel Newman discuss the tech news stories that made headlines this week. The handpicked topics for this week are:

  1. Dell Tech World 2024
  2. Microsoft Build 2024
  3. IBM Think 2024
  4. Special Guest – Dan Ives, Wedbush MD
  5. NVIDIA Q1 FY25 Earnings
  6. Synopsys Q2 FY24 Earnings
  7. Lenovo Q4 FY23/24 Earnings

For a deeper dive into each topic, please click on the links above. Be sure to subscribe to The Six Five Webcast so you never miss an episode.

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Disclaimer: The Six Five Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we ask that you do not treat us as such.

Transcript:

Patrick Moorhead: Welcome back to the weekly Six Five podcast. I am Pat Moorhead, and I’m sure everybody knows Daniel Newman. And it’s a favorite day of the week, on the road the entire week, but we made it back just in time to get on this show. Daniel, how you doing this morning?

Daniel Newman: Hey, buddy. It’s Friday. It’s episode 218. We’ve done this now 217 times, and by the end of the hour, we’ll have done it 218, not to mention thousands of other sit downs, and hundreds of summit sessions, and all kinds of other endless punditry, thought leadership, commentary, analysis, but I’m okay. I mean, we squeezed a red eye in this week, coast to coast, and I’ve got another month, buddy, and it’s just going to be freaking brutal before my world clears up.

Patrick Moorhead: Yeah, when I add the whole thing up, I will have traveled, I think seven straight weeks, but I’m not dead yet, focused on my health, I haven’t slept really much at all this week, but I’m feeling pretty good, Dan. I’m in that third month of gut-killing drugs, and I’m feeling remarkably well. I think this stuff might be working.

Daniel Newman: Yeah.

Patrick Moorhead: Hey, enough about us, but… We do like to talk about ourselves, I mean, you’ve got to have a pretty big ego to do what we do, but… Hey, we’ve got a great show for you. We’re talking about Dell Tech World 2024, Microsoft Build, IBM Think. We’re going to have a special guest on, who could that be? Guesty besty. Cannot Wait. We’re going to talk about NVIDIA’s just crushing earnings, Synopsys, and Lenovo earnings. We’re going to save all the earnings for the end. And hey, just as a reminder, we do cover publicly-traded companies, don’t take anything we say as investment advice. If you saw Dan’s portfolio, you would run away-

Daniel Newman: Mine?

Patrick Moorhead: … except for the crypto. Of course.

Daniel Newman: Yeah, man. Well, it depends on the week with the crypto, you know what I mean?

Patrick Moorhead: Totally. Yeah, I never hear from you when it plummets, but man, I hear from you… You are showing me screenshots of how well it does when it’s up.

Daniel Newman: Yeah, well, I only count my wins. How many times in your history have you gone back and really leaned into one of those tweets where you really bombed?

Patrick Moorhead: Oh, never. In fact, I just go and delete it, Dan.

Daniel Newman: Yeah. Thank God there’s no caching of the internet.

Patrick Moorhead: No. No, no, no, no, no, no. The Wayback Machine is there for Twitter too.

Daniel Newman: Oh, I had an idea, I had an idea. We should get a computer that takes endless screenshots of your activity all day long so you can semantically search it.

Patrick Moorhead: How about that? We are going to talk about that.

Daniel Newman: That’s not creepy. That’s totally cool.

Patrick Moorhead: That is awesome, ’cause it sits on your PC, and… Oh my gosh, I hope you’re not one of those people. Anyways, let’s dive into Dell Tech World, Dan and I were there in Vegas. I mean, it was just off the rail. Six Five was there. I think we did 11 videos. It was pretty awesome.

Daniel Newman: Hey, man. Well, yeah, great to be there. It was, it was a sort of end-to-end, wall-to-wall, quick trip on the weekend, got in town. Dell Tech World… Zooming out a little bit into the macro, I mean, look, OEMs were boring for a long time, and let me just tell you something, something happened at GTC this year. Jensen Huang, kingmaker, the godfather of AI, hint to who our guests may be later, suggested that Dell Technologies is the place to build your AI factories. I don’t remember the exact words he used, but he pointed, he walked, it became Twitter famous instantaneously, and he basically anointed Dell as the company that can build your end-to-end AI factories.

This event did not disappoint. Dell this week skyrocketed to a new all-time high. I know we’re not just talking about markets, we’re also talking about Dell Tech World, but these things are inextricably linked together. Right now, the world needs to build AI infrastructure. Now, there are the sort of mega cloud providers that are buying hundreds of billions of dollars of CapEx this year, and then there’s going to be the on-prem enterprises that are going to want to deploy competitive AI solutions. Dell Technologies, led by, of course, Michael Dell, Jeff Clark, this week came to market with more new good stuff, supporting the GPU upgrades, the Blackwell that’s coming from NVIDIA, basically talked about… What did Jensen say when he was on stage? “Don’t seduce me with your 72 Blackwells in one rack.” Was it 72-

Patrick Moorhead: No, I know that. There was this weird, awkward moment. I don’t know why are you not allowed to say, I think the word passion, or… I don’t know.

Daniel Newman: Seduce.

Patrick Moorhead: Seduce.

Daniel Newman: It doesn’t matter, Jensen can say anything he wants.

Patrick Moorhead: True.

Daniel Newman: But the net-net of it is, is that the AI factory for the on-prem enterprise is going to start to see scale, and Dell is going to be in great shape. This was evident in its last quarter’s AI server bookings. That backlog is growing by leaps and bounds, they’re coming out with the new parts, and as NVIDIA continues to accelerate its roadmap to shorter and shorter timeline, this is going to bode really well for the companies that can get the parts, and then get the servers built, and then can get them deployed, and can help enterprises deploy AI at scale on-premises. So that was the big part. And of course, they backed it with new storage-driven architectures that are going to be more well-designed for AI. They didn’t forget to focus on networking.

We saw Charlie Kawwas, president of Broadcom on the stage, and of course, they talked about end-to-end solutions, and software. Bill McDermott on the stage. It was the Bill, and it was the Jensen, and then it was the Michael Dell show. And by the way, best part of the event was our selfie analysis, where we got an epic selfie with those three gentlemen when we went over and chatted with them for a bit. It was a great event. We sat down with Michael Dell, you’ve got to check out the interview, we’ll put it in the show notes, long interview. I think Michael might have told you, Pat, that you are killing it. And that was a pretty amazing moment for all of us when a guy that’s created $100 billion empire by taking much, much more risk than most of the average bears, and at the same time, doing it so strategically, with such grace and humility. You’ve just got to love that guy, don’t you?

Patrick Moorhead: Yeah. I’m pretty sure he told us we were both killing it, but…

Daniel Newman: Yeah, I like to hand the credit. I read a book called Play Nice But Win, it’s something about giving more credit than you take. So you can have the credit, I’ll live in the shadows, but I’ll cash the checks.

Patrick Moorhead: Oh, I just thought you were doing it to… So it’d forced me to say, “No, Daniel, you really are killing it.”

Daniel Newman: Thank you, Pat. I needed to hear that this morning. The last thing I’ll say, and I’m going to leave a little bit of this, ’cause this’ll actually flow nicely into our next topic, but they did announce five new Copilot+ PCs, Dell, based on the Qualcomm architecture, which is a big, big deal. This has been going on for a long time. Qualcomm this week at Dell, and at Build, which Pat will kick us off into, made some mega, mega progress in its ambitions to play in the PC space, based on more mobile-like architectures, giving real competition to Apple, and Dell had five variants that it announced this week. So it wasn’t only an infrastructure show, it was an infrastructure show, it was a PC show, it was a great event for Six Five, check out all of our other videos. Pat, I’ll kick it over to you to talk Dell, and then of course, you can top on when I’m starting here with the AI PC and Copilot+.

Patrick Moorhead: Yeah. So Dell Tech World, this is the first time that I have seen a cohesive strategy and communications from Dell related to AI. Hats off to them. It’s AI, end-to-end AI. And the whole premise of the Dell AI factory, it all starts with the data, that you and I have been talking about forever. And then Dell loads services, their ecosystem, and their infrastructure that delivers use cases, from content, code generation, data creation, a general digital assistant, computer vision, digital twins. And their objective here is to make it simple, secure, and economical. You cannot argue with that. And the way that they slice it up, they’re literally showing how you can build your AI factory on-premises, and they cut it by solution, by product, and by consumption model.

So the new stuff they brought out, it was literally a sea of new. A lot of the times, the Dell Tech World, you might see two or three things that are big, but it was pretty much off the rail, on the services side, enterprise hub, services for Copilot, open ecosystem. The new ones were Meta, Azure, Qualcomm, Hugging face, and as like you said, an expansion with NVIDIA. And the interesting thing that I don’t think a lot of people caught is Jensen said, “With Dell, it’s the largest go-to-market for his GPUs out there.” That says a ton. And I don’t know if that’s largest go-to-market on-prem, or overall, even looking at places like Azure and AWS, but it was very impressive.

And then on the infrastructure side, which we all know Dell for, like you said, five new Copilot+ PCs, new power scale, new power switch to connect all that goodness in the rack, and the fleet, and Dell data protection as well. So literally just like a one, two, three, four punch, it all came together. And again, for the first time, Dell brought together a coherent strategy, end-to-end. And by the way, Dell Data Lakehouse. Dan, how long have we been talking about the data game, and all the… I’m the annoying guy in the back of the room that says, “Hey, how about Snowflake? What about Cloudera? What about Databricks?” Somebody like that.

Daniel Newman: Snowflake had a good week, made a pretty good result. I mean-

Patrick Moorhead: Yeah, they did. No, you see, but my point is not to… My point is, is that Dell, to me, for the first time, has pulled in the data part. Not the storage part not the data protection part, but the respect that data management is keeping most enterprises at bay. So hey, let’s dive into the next topic here, Microsoft Build. I mean, these Big Ten events, so many announcements. Copilot+ PCs. Listen, I have created new category products. I created one of the first internet PCs when I was at Compaq. I created one of the first sub-$1,000 PCs when I was a Compaq, it is fricking hard. Hats off to Qualcomm and Microsoft to do this.

First of all, you’ve got to make bets four years before this, particularly on the silicon side, but Roto-Rooting your operating system to get there. This is fricking hard. And then you have to align across all the OEMs, Dell, HP, Lenovo and more, and then across all the Taiwanese OEMs, and the Chinese, and then aligning across ISPs and global channels. This stuff is hard, and it is very impressive. It’s weird, the stuff on recall, how ignorant can people be reporting that recall is this privacy nightmare. It’s on-device, folks. It is taking those snapshots. Oh, and you can turn it off if you want. Give it a break, folks. It annoys me at the ignorance, and some of the folks who are essentially not doing their fact-checks, and just blowing up… And these are major outlets here. The other thing that I want to kick back on is, Daniel, I think you refer to this time, the trip that we took to Redmond to when generative AI started, and that was the Microsoft event-

Daniel Newman: It was the beginning kind of.

Patrick Moorhead: … with OpenAI.

Daniel Newman: Yeah.

Patrick Moorhead: Boy, has Copilot been moving. Top to bottom, east to west, customized for your application, customized for different areas, and different personas.

Daniel Newman: Pat, they’re under it. They got it to the left, it’s to the right.

Patrick Moorhead: Exactly. Connecting the front-end to the backend. I mean, Copilot for finance, Copilot for… Copilot for pretty much any way you want to-

Daniel Newman: Daily service.

Patrick Moorhead: I know. No, it’s incredible. Out-of-the-box with Azure AI, 1,600 different foundation models on Azure AI, and not just OpenAI as some people mistakenly talk about. So a lot of stuff going on there, I think the book of news, again, was more like a dictionary of news, but those were the highlights for me.

Daniel Newman: Yeah, so you could go on and on, but the double, triple, quadruple-click is that, folks, the whole beauty of the AI Copilot+ PC and what it can do is, it can give you all of the power of that sort of large language model in the cloud, but it’s on your device. And so you said it, I want to say it again, because the reiteration here is, you don’t have to do it, and you don’t have to let your device, but by the way, people, will you just stop acting like you give a crap about security? I mean, look, you carry the world’s most capable-

Patrick Moorhead: Privacy.

Daniel Newman: Surveillance device in your pocket all day long, you don’t look at the settings, you don’t read your privacy, you don’t read your terms and conditions, and now you’re going to care about this. Come on, get over it. I was on CNBC, I was asked about the whole Scarlett Johansson thing, and the OpenAI… Look, OpenAI’s got some cracks in the armor, there’s some weird stuff going on there for sure, but the actual issues related to privacy, that shipped sailed a long time ago. Nobody cares, regulators don’t have a prayer of being able to keep up with it, and the-

Patrick Moorhead: Well, Dan though, Dan, this was a factual thing though.

Daniel Newman: No, I know. I know. But what I’m saying though is, the whole trendline though, Pat, of people pretending to give a crap about something that they never gave a crap about, and in this case, it’s not even accurate. So the point is, now you’re picking an unfactual idea that, on your device, it’s somehow sending this back to the cloud, which it’s not, and people are going to suddenly be outraged by it, when all day long they have a device that is connected to the cloud, sending out their data, and they do not care about it. So choose your outrage carefully, people, because this isn’t your thing.

And long and longer short here, Pat, is, all I mean is, look, we need these enterprises like Microsoft to build solutions that allow people to have AI on their device privately for their own use. By the way, this is what Dell is doing, we’ll talk about… This is what IBM is doing, and the enterprises as well, so that companies can partition between what needs to stay private in the enterprise, compliant, regulated, and have the right data lineage and provenance. At the same time, on the other end of this spectrum, sometimes to get the right experience, you do need your data to go out, it needs to be refreshed, it needs to be… And you have to be able to be smart enough to make that decision. Enterprises are going to build products to grow their companies. That’s my personal take, and we can debate that at some point if you don’t agree with me, not just you, Pat, everybody out there, I’m ready to fight, I don’t care. Let’s go, dukes up, I’m in. Okay. What else though, Pat? Go ahead, go ahead-

Patrick Moorhead: No, no, no, no, you tell me. I’ve already talked about Build.

Daniel Newman: Okay. Well, real quickly, I mean, look, there were other things besides the PC, which… The new Copilot+ PC. They did expand their partnerships outside of OpenAI, there were some bigger announcements with Hugging face. They did focus too, Pat, on some small language models, which is really a trendline this week, these smaller language models getting more narrow. Fi 3 was a big focus this week from Microsoft, and the idea of being able to use smaller models, that’s partially about on-device, but that’s partially going to also be about enterprises being able to do vertical and industry-specific things with models that are going to be more valuable, lower power usage, and more efficient for getting workloads done that are going to be business positive for companies. And that was a big part of the focus as well, help developers build models that are going to drive efficiency, productivity in business, and ideally, do it all as power efficiently as possible.

Kind of a sub-topic, Pat, because you and I both know the power and AI thing creates this really tough contention in terms of business strategies, but I think we’re working towards it, we’re seeing a lot of progress in AI. I’m going to move on from this one, but it was a very positive Build, I actually thought it was very positive. Some people thought it was a little bit too AI device and gimmicky in some of the things I read, I actually thought they hit the message really well this particular event, and I give kudos to Microsoft for this one.

Patrick Moorhead: And the only thing I wanted to wrap-up, I just want to be very black and white about this, you can turn off all recall capabilities, and it doesn’t transmit data. That’s the whole idea, folks, of on-device AI keeping your privacy the way that you want it, it does not transmit. While I’m sure in the future there might be an option for you to do that, to be able to save snapshots, to have a longer memory, you can turn that off too. So let’s move on. Congratulations to Microsoft and also Qualcomm. Let’s move to IBM Think, you and I left Dell Tech World got on a red eye, landed at about 4:00 in the morning to get ready for our 7:00 appointments. Dan?

Daniel Newman: Yeah, look, I mean, IBM Think was another big inflection moment. Kicked off by keynote by Arvind Krishna. Arvind got on the stage, focused in on the company’s two main areas that they’ve been focused on for now, what? The better part of the last three or four years, but it’s been hybrid cloud, and AI. And you could kind of argue to give some credit to IBM. When it was hybrid cloud and AI about three years ago when Arvind… Three, four years ago when Arvind took the helm of the company, hybrid cloud made a lot of sense. You and I were wrapped up in that world, that was pretty much anything and everything at the time. But AI was a bit more curious, because it was like, “Well, we’ve been doing AI forever.” But at the same time, what are we talking about? Machine learning, deep learning, neural networks, advanced analytics, what AI are we really talking about?

And so with that in mind, I was kind of waiting, but you saw he hit the trendline on the head. First, out of the gate about a year ago at their think event, where they did the IBM watsonx.governance, and IBM watsonx.data, and the whole platform, end-to-end enterprise AI, and they’ve nailed it. I mean, look, I’ll give you the contentious point of view on IBM. I really have admired under Arvind’s leadership how they’ve been able to launch and build this first out of the gate platform, first to GA platform. They’ve integrated a lot of really what I call good stuff with Red Hat this week. They came out talking about InstructLab, which is basically the ability to refine and tune models in a much more efficient way in an open source community.

They, of course, continued to open source Granite models, which is, they’re doing these models, and they’re very focused right now on this kind of smaller language models that can be utilized for vertical and industry solutions. And we’re seeing, coming out of consulting, a whole bunch of really capable use cases that are industry, financial services use cases, healthcare use cases, defense use cases. And that’s what I felt walking away from this thing, was, they also see that, a lot of the time… What Dell kind of keeps saying, Pat, about bringing compute to your data, same kind of thing going on here, “We’re going to be doing a lot of it on-premises.”

The other thing with IBM though that I thought was really prescient was the fact that they’ve been able to show… And this was more Rob Thomas, Dario Gil, you did a video with them. They’ve been able to communicate the way that we can find economic efficiency in delivering more tuned models. We hear a lot about RAG, and we’ve heard a lot about RAG over the last several months. RAG is kind of the poor man’s approach to doing model… Yeah, Pat’s shaking his head at me. It’s the lowest common denominator of using your existing data. It’s not always the most up-to-date, it uses more lineage and more older enterprise data. What they’re trying to promote here with doing their approach with InstructLab, is that the open source community can continually refine it, and get the outputs and the quality that you would get out of tuning. And forking models and tuning models is really hard, really expensive, and really difficult to track.

So I keep kind of using this analogy of RAG cost. RAG is efficient price-wise, because it’s data you have, it can access that data, and it can use it to create and generate outputs. Tuning is hard, ’cause you need synthetic data, you need to scale data, and you need to refine it in a way that’s really, really expensive. And so my big takeaway, and we can have a bit of a debate on is RAG the right model? Is tuning the right model? Is InstructLab the right way to go? But we need a bit of all of it, and IBM is helping proliferate it quite a bit faster, and that was my big takeaway from the event, and kind of the key highlight to me.

Patrick Moorhead: Well, that’s a good breakdown, Dan. And it’s interesting, if I had to sum up the entire conference, it would be that IBM is making AI real for enterprises, and that, hey, they could be your starting point, a strong alternative to starting with the hyperscaler. And not that you wouldn’t deploy hyperscalers, but starting there with Red Hat for instance, leveraging InstructLab. And by the way, the reason I say that, and I know it could be super controversial, is because, as we’ve said, 75 plus percent of enterprise data is on-premises or on the enterprise edge. It’s distributed, and therefore, you have to have a hybrid architecture to do what IBM calls AI at scale. I totally believe that. And it’s this idea of bringing the model to the data, versus the data to the model. Starting off with an open-based model, you trained it on public data, tune it to your own enterprise data, and also, I think IBM was all over smaller models.

So it was impressive. I finally understand what Concert was. It’s kind of funny, I love slides, and if you talk to me for an hour, I might not have any idea what you’re talking about, but Dario shows one slide on InstructLab, I see one slide on Concert, and boom, I understand exactly what it is. InstructLab, to me, is like you’ve got the three bears. You can take this large language model, blow it up, do RAG against it, maybe get you 90% there, or you can create your own smaller model, which has been super expensive and complex. And InstructLab just seems like a great middle ground, where you can actually create your own proprietary model, you can do RAG on it at the same time. So super impressive.

The automation stuff with HashiCorp, I’ve got to tell you, super compelling. I think there’s so many different brands out there of IBM software, it’s getting a little challenging, and I can understand this… There’s two ways to look at this. One side says, “Hey, best-of-breed software and brands is the way to go. There are category killers, and that’s what people want.” And then on the other side of it’s, “Hey, people want something that’s kind of pulled together comprehensively.” I don’t have an exact answer for that, but when I looked at all the different brands, and how they come together, it seemed a little complex for me. I’m going to end on, I think IBM needs to get more credit for its open models. I mean, they open sourced the Granite code models, and this is huge programmers. I have no hesitancy as saying that these models do perform the best versus other open source models doing what I love to talk about, and that is benchmarks. Bob… Sorry, Bob. Dan, did I leave out anything?

Daniel Newman: Hey, hey, hey, hey. No, no. But at some point, we do need to come back to kind of talking about these different bears, and these different approaches, and the techniques, and why certain ones are going to be better than others, and costing and structure, and then of course, to your point, putting the benchmarks, testing the performance. ‘Cause in the end, it’s all about getting the most accurate, on point answers, and building that data ecosystem that enables to create these frictionless experiences. So it was good stuff. It was a good event. I was pooped by the time I got home. Man, those red eyes just kill me. I think they say you die younger from those red eyes, and I’m pretty sure they’re right.

Patrick Moorhead: Yeah. So our special guest we are introducing here, Dan Ives-

Daniel Newman: On the stage.

Patrick Moorhead: Welcome to the program.

Dan Ives: Great to be here. I thought Moorhead was going to wear his shades, but I guess not.

Patrick Moorhead: I’ve got to tell you, man, trying to keep up with you is going to be impossible, but hey, here we go.

Dan Ives: Oh, yeah.

Daniel Newman: Oh my God- you guys. All right, I’m feeling really left out here. But you know what? These are transition lenses, Dan. So if I go outside, they’ll turn color too. My wife makes fun of me, she goes, “You know you’re wearing transition lenses, right? That was cool 30 years ago.”

Dan Ives: I love it. I feel like, Patrick, this is the start of his evolution. Next thing you know, he’s going to be wearing pink Aviator Nation. It’s going to be crazy.

Patrick Moorhead: No, totally. So Dan, if you wouldn’t mind, can you… I mean, anybody who gets into what you do knows who you are, but Dan Ives, can you please introduce yourself, what you do, who you work for? And by the way, if you’ve ever turned on CNBC, Bloomberg, Fox, Yahoo Finance, Dan’s pretty much-

Daniel Newman: You’re prolific, man. Pat and I kind of look, “How is he everywhere at one time? How do you do it? How do you do it?” No, yeah, give an intro, tell everybody a little bit about what you do-

Dan Ives: Yeah, well, first of all, it’s great to be with you guys, and I love all the work that you guys do, so it’s great to be here. So I’ve covered tech stocks on Wall Street going back to late ’90s, so I guess almost 24 years. And really I started covering tech stocks back in the bubble. So covering tech stocks in the bubble first, and then since. I think we’ve developed a reputation among institutional retail clients, just trying to identify the trends, who the winners are, and just sticking to that, and just doing the work. But also three million air miles, doing the work on the ground, in other words…

I think that’s been a huge differentiator for us, like with Apple, or Tesla, and some of the cloud and cybersecurity names. Because like we’ve always said, and I’ve been at Wedbush almost six years, it’s hard to make these stock calls from a 10×4 office building in New York City. But look, you guys do the same thing, you were just talking about it. I think that’s an edge that you get, that even though it’s laborious, I think it helps in a confusing environment.

Patrick Moorhead: So Dan, let’s put all of that awesomeness to the test. We are going to dive into NVIDIA, and we’re going to give you the first word here, and let’s talk about it. Break down NVIDIA Q1 FY’25 earnings for us.

Dan Ives: I mean, it’s essentially… That’s a masterpiece that they should hang that in the room. Because everywhere you look, 6 to 10 to 15% ahead of buy-side risk expectations. And if you look from a chip perspective, it’s not slowing down, it’s accelerating. I would almost say, they had to do the split, otherwise you’d be looking at $40 of EPS earning in ’25, ’26. I mean, it could get almost Twilight Zone types of numbers. And I think the reality is that, look, we just had our Taiwan checks, we just came back in terms of our Asia checks, it’s showing, basically, through the end of next year, we’re essentially sold out. And I think there were some fears about double ordering and things like that. As the godfather of AI, Jensen, talked about, none of that, right?

Patrick Moorhead: Yeah.

Dan Ives: And you guys see it first hand, but if you don’t get these chips, you’re in the back of the line.

Patrick Moorhead: Yeah. Yeah, that’s right. So, hey, Dan, what do you think about this? So if I look at the print from July of last year, they’re beat by 30% on EPS, 22% on revenue. And here we are, NVIDIA only beat 10% on EPS, and only 6% on revenue, so the beats are declining. Is that because Wall Street analysts, folks like yourself, are getting better at the expectations or something different?

Dan Ives: Numbers came up 15% during the quarter. So essentially now what’s happening is, every week, as everyone does their trips, numbers go up. You could be like buy-side risk expectations are ramping further and further up, but we’re not even there. In other words, I think… Investors that I talked to, you’re now starting to do some scenarios to be like, “Okay, I don’t think that we see any sort of slowdown for another 4 to 6 quarters.” And under that assumption, that’s why it goes back… When people are like, “Oh, it’s expensive, and the stock…” Look, I think so many investors that have missed every transformational growth theme from Amazon, to Microsoft, to Tesla, Meta and many others, it’s getting too caught up in just the street evaluation on next year. I think you’ve got to look out next three years. And I think next three years, we’re talking NVIDIA, we’re talking three trillion and four trillion, is not…

Daniel Newman: So Kelly Evans asked me that when I went on, like, “Could it be four?” And I said, “At this point it could probably get to five.” I mean, realistically, at the run rate, it could happen. And the interesting thing is though, Dan, and I’d love to get your take on this though, is it feels like it’s all clear. Literally, they’re flying at 48,000 feet, there’s no… Do you see any of the people that kind of claim to be competition as actually meaningfully being able to compete anytime soon?

Dan Ives: I mean, that won’t happen until mid ’26 at the earliest. So to your point, Jensen’s flying that plane, and investors, they’re sitting in 3A drinking a Cabernet, watching Netflix, doing really good about where that’s going. That’s why and also betting against it, you’re betting against a force that we haven’t seen since the mid-90s start of the internet. The only difference is, look at the actual profitability in those margins. And I think the bigger story here, and you guys do a great job always talking about it, and obviously see it for your clients, if someone told you Dell was an AI play six months ago, you guys were there, but others, they’d be like, “What?” So now, look at ServiceNow, Oracle, start to go down the list, it’s not just Microsoft and NVIDIA. So I think we’re really going to start to see a rereading, as well as numbers go higher across the rest of tech.

Patrick Moorhead: Totally agree on that. And Dan, on the competitive front, let’s just say that over two and a half years, you’re looking at a $400 billion market, and it is possible for NVIDIA to have stratospheric growth, and by the way, Intel and AMD can grow at the same time, in addition to some of the competition from AWS, Azure, and Google doing their own accelerators. Is that the way you’re kind looking at this, “Hey, there’s going to be competition”? ‘Cause AMD is getting traction, Intel next year will have its own GPU, but it doesn’t even mean that it would take NVIDIA off track.

Dan Ives: It’s not going to take them off track. We’re talking about demand they can fill. Now, look, if I’m betting on someone, it’s Lisa Su and AMD, that’s going to… If there’s another player I’m betting on, I have confidence that they will get some of that overdraft, but it’s essentially overflow.

Patrick Moorhead: Yeah.

Dan Ives: And the reality is-

Daniel Newman: No, I was just going to say, there’s a market to be had though by being the overflow. It’s funny, Dan, I use the analogy of, NVIDIA sits right now where Intel sat at its peak for computers, meaning-

Dan Ives: Yep that’s true.

Daniel Newman: … at its peak, where it has a multi-decade lead, it could literally screw up for the next 12 years and still have 70% of the market. ‘Cause I mean, look, that’s what’s happened with… In a really broad brush, Intel has had a really tough decade, and still has majority share of certain architectures. The problem is now the architecture’s changing.

Dan Ives: And the problem right now, the godfather of AI, Jensen, sitting in his office, the dark office with his black weather jacket, and people were coming in, “Jensen, can I get just a little piece?” He’s like, “Eh, we’ll see you in a year and a half.” So by being the godfather of a fourth industrial revolution, betting against that on valuation with your 10 spreadsheets, tough bet.

Daniel Newman: Well, the only thing I guess that’s interesting for folks like us, Dan, is we have to try to see the things that happened a little bit before everyone else sees them, that’s what makes us any good at what we do. I think we all have our claim to fame wins. I always point back to July, ’22, I went on, and Becky Quick was hitting me on why I was still saying NVIDIA when it was at 150, and it was burning, and I go, “Look, do you believe in AI or you don’t?” I said, “I believe in AI. They’re the only company right now that’s got the whole stack. It’s going to run.”

Dan Ives: Also, you guys, I actually… When you say that’s your cream, I actually think, in my view, where you and Patrick have been so ahead, it’s not just on that, it’s names like Dell, the IBM rereading, if you look, ServiceNow in some… See, I feel like you’re some of the only ones else out there that you were three steps ahead, and that’s starting to come through. ‘Cause it’s not just about NVIDIA, it’s about the ripple effect. ‘Cause I think what’s fascinating now is the second, third, fourth derivatives playing out. You guys have just been road warriors, I feel like… Every set, I’m like, “How could they be at another user conference?”

Patrick Moorhead: Yeah. Hey, Dan. I just want to thank you. It’s funny, Dan and I love to talk about ourselves, and pat each other on the back, but coming from you, that means a lot. I mean, listen, the thesis we threw out almost 18 months ago, it’s going to start in the hyperscaler data center, it’s going to move to enterprise IT, which also pulls with it enterprise SAS AI. And then, by the way, it’s going to the AI PC, look at Qualcomm’s numbers-

Dan Ives: I know.

Patrick Moorhead: … all-time high. And we’re going to see… By the way, the next step-

Daniel Newman: It was an all-time high too, by the way, Pat.

Patrick Moorhead: Exactly.

Dan Ives: Yeah.

Patrick Moorhead: And then, Dan, after this, it’s going to be the AI smartphone.

Dan Ives: No, exactly. That’s it.

Patrick Moorhead: Yeah. Apple.

Dan Ives: Exactly.

Patrick Moorhead: Yeah.

Dan Ives: Just so you know, from our perspective, 18 months ago, where you feel like you’re like a lone wolf just with a thesis, I actually… All the work that your team does, as someone that I super respect, I would look at the stuff you’re talking about to triangulate what I’m doing, because I think it’s important, where… And we’ve all been there, when you’re in markets where everyone’s saying, “You’re a clown, You’re crazy.” But I’d be like, “Okay, look, if I’m in Asia on a two-week trip, and I’m seeing it throughout the supply chain, you could see that from the 10th floor of your office building. I’ll go with my data. You go with your data.”

Patrick Moorhead: Exactly. No, that’s great stuff.

Daniel Newman: Oh, hey-

Patrick Moorhead: Yeah, go ahead, Dan.

Daniel Newman: Oh, no, we’ve got maybe a minute or two, Pat, then we’ve got to roll, and Dan, thanks so much. You’re heading to the studio, or are you heading to the office?

Dan Ives: I just came back, in between then a podcast and stuff.

Daniel Newman: Oh.

Dan Ives: No, but I was super excited to… All the work that you guys are doing, it’s phenomenal. ‘Cause when I think AI revolution, we’re all going to be a part, and to be a part of this journey with you guys is going to be awesome.

Daniel Newman: So next week, we sit down… Our big event, the summit, love for you to give it a shout, Dan, if you ever get the chance, or Six Five. We’ve got Bill McDermott as our main keynote, we’re going to be sitting down with him in the office next week. What should I ask him? What should I tell him? That, “Dan Ives wanted me to ask you…” What should we ask him?

Dan Ives: When you have to go there, ask McDermott, be like, “Look, you’ve seen everything the last 30 years, where does this compare, whether it was mid-’90s, early…” I mean, the guy’s seen everything, from Oracle days, to the cloud shift, to PC. I think it’s for him to separate how real is this versus hype. And I think when it comes from his mouth, the credibility there… It’s a drop the mic when McDermott talks. ‘Cause I think, in my opinion, in that Mount Rushmore of tech CEOs, of course, Godfather of AI, Jensen, Nadella, Cook, team McDermott’s up there, man, they’re starting to etch it.

Daniel Newman: Well, I don’t know, Pat. I mean, look, we should do this again. We should have you back. What’s the next… Apple? Is that-

Dan Ives: WWDC. Yeah.

Daniel Newman: So maybe we can get you to chime back in for WWDC.

Dan Ives: Yeah.

Daniel Newman: No, Pat and I, we pick on Apple more than others. We even can come in and kick our ass for it, because we’ve been a little harder on them than… You just came out and basically said they’re going to get this next trend right, so I guess-

Dan Ives: But they deserve that. Now, you have 2.2 billion reasons in terms, come out and now have the renaissance of growth. And I view Apple as where I viewed Meta ET months ago.

Patrick Moorhead: And listen, Apple is going to be amazing if they can leverage their platform for the AI iPhone. And they’re going to do that, I mean, they’re not going to lose share. I mean, their biggest thing is reducing the replacement cycle for your phone. And imagine if they would do that by a year. Run those numbers, Dan.

Dan Ives: And right now, the New York City cab driver that I just… They’re bearish on Apple.

Patrick Moorhead: Right. I love it. Hey, Dan. Thank you for joining us. This is great. By the way, keep your eye on Taiwan next week at Computex. Dan’s going to be there, but there’s going to be a lot of announcement. Qualcomm, Intel, AMD are all bringing out new stuff there. By the way, all three CEOs will be there, including your AI godfather, Jensen Huang.

Dan Ives: And now Moorhead’s going to start wearing the sunglasses these user conferences.

Patrick Moorhead: But you’ve got to take-

Dan Ives: I’ve got to give me credit. When you start wearing the sunglasses, and you start wearing the sunglasses indoors…

Patrick Moorhead: Buddy, I’ve got to tell you-

Daniel Newman: Nobody does it like McDermott.

Patrick Moorhead: Dan, the future is so bright-

Dan Ives: McDermott’s the G.O.A.T. He’s top of there, come on-

Patrick Moorhead: The future is so bright, Dan, I’ve got to wear these non-Stop. Anyways, Dan Ives, thanks buddy. And you take care.

Dan Ives: Have a great weekend.

Patrick Moorhead: Take care.

Daniel Newman: See you soon, bud.

Patrick Moorhead: Bye-bye.

Daniel Newman: That was fun.

Patrick Moorhead: I know. I know.

Daniel Newman: And on the road, man. Talk about a Six Five on the road. I mean, literally on the road- in the streets of New York. Dude, what’s with the shades? I feel like outside of some inside joke, what’s the reason he’s pushing you to wear shades so much?

Patrick Moorhead: Probably just because I threw them on. Listen, I walk to work, you don’t. Actually, you even-

Daniel Newman: Did you-

Patrick Moorhead: … walk to work, but –

Daniel Newman: Did you guys talk about it in the green room when y’all were hanging out? Are you going to start wearing periwinkle, and blue, and pink jacket, ’cause…

Patrick Moorhead: I’ve got to be me, Dan. Dan, I’ve got to be me.

Daniel Newman: I don’t want to be the second most important Dan in your life, we’ve got to make sure we hit this at the curb, but-

Patrick Moorhead: Always be my bestie.

Daniel Newman: All right. We’ve got-

Patrick Moorhead: All right.

Daniel Newman: … two topics left, do you want to hit Lenovo?

Patrick Moorhead: Sure, let’s-

Daniel Newman: Wait, you’re the host. Let me get out of here. I’m going to…

Patrick Moorhead: Well, actually, we’re hitting Synopsys, and you’re hitting it.

Daniel Newman: Oh, I’m going to hit Synopsys. All right, that’s fine.

Patrick Moorhead: Yeah. Okay.

Daniel Newman: Yeah, we’ve only got a few minutes, so let’s move pretty quickly here. Look, there’s the good, the bad. So Synopsys did a recast in the middle of the last quarter, and it sort of created a little bit of confusion, because the initial read out on Synopsys was that it effectively had missed its result on the top line bottom. Had to do with the SIG, the spinoff, and the numbers. But after they actually recasted it, it looks like they basically had a high range of guidance and a beat.

Look, I mean, in the end, Pat, Synopsys is one of the coolest companies most people have never heard about. They’re in the middle of a huge acquisition of Ansys, they’re really important in that whole chip design space, with more and more companies in the automotive space and in the hyperscaler space, all building their own silicon. They are one of the most important technology companies on the planet right now, and starting to get credit for it, but of course, they got kind of slammed on the immediate onset, because people were reading it, and didn’t look at the adjustment that they made on their investor day, and-

Patrick Moorhead: Did they just not believe them or something, like, “Okay, I’m not going to believe what you’re saying here”?

Daniel Newman: For the one time, I don’t have the insight to say for sure, but what I’m telling you is, I was the first on Twitter to come out and say they were wrong when they actually said it was a miss. And thanks for amplifying my tweets so someone would actually see it. Anyways, but we also have-

Patrick Moorhead: But you deleted that one though.

Daniel Newman: No, I didn’t, not that one I kept that one live. It was the one I tweeted later that no one read that I deleted. Yeah, so everyone out there, just know there’s an inside joke here, it’s not actually that funny to me, but there is an inside joke. And look, but here’s the thing about AI. The AI trendline is going to create more chips by homegrown, it’s going to create more chips by all the merchant providers, and it’s going to create a more rapid pace of innovation. We’ve heard Jensen come out on this call basically talk about Blackwell, and then a one-year cadence. This isn’t only going to be NVIDIA, everyone now is going to be beholden to the cadence that’s being created by the godfather of AI himself… I can’t say that anymore. In terms of designing next-level chips. And then of course-

Patrick Moorhead: You know you want to.

Daniel Newman: … the AI and the EDA tools are also going to be used to drive more efficiency, more pricing. And of course, Synopsys brought out generative tools to help companies move even faster with design, which, as we can see, is going to be absolutely necessary, Pat. I’m going to hit this one quick. That’s all I’ve got to say. What do you got?

Patrick Moorhead: Listen, Synopsys is an incredible play. But listen, five years from now, EDA is going to be the power player, they’re going to be… Are they going to be the NVIDIA? I don’t know. But we have more transportable intellectual property, we have more companies who want to develop their own chips, we’re already seeing it with the hyperscalers and the auto companies, and then you’ve got merchant silicon companies doing more chips, more diverse, and you have more designs integrating generative AI capabilities, which you need to re-spin your designs, even on the Internet of Things. And I just think that this company, people don’t understand it.

And like 10 years ago, I called hybrid cloud when everybody was saying cloud-only, EDA companies like Synopsys are going to be fire, people just don’t know it yet. All right, let’s move it to Lenovo earnings just to end this out. First of all, what a banger of a quarter. I mean, I wasn’t expecting this at all. If you look at the companies that compete with Lenovo head-on, Lenovo blew it out of the water. I mean, the revenue was up almost 10%, net income was up 118%, every single business was up. non-PC revenue, 45%. That’s huge, because when people think of Lenovo, they mistakenly think of PCs only. But I understand why they do, because their number one market share. SSG services up 10%, non-PC services up 55%, that’s huge. ISG, which is a data center and edge, up 15%, that’s a quarterly record, storage and services up 52%. They had records on HPC on the edge.

I got the chance to chat with Kirk Skaugen on AI servers, and there wasn’t a whole lot of information there. But basically, 29% of the mix is AI servers. Pipeline grew 55% quarter-on-quarter to over $7 billion. Now, that’s pipeline, but not backlog. AI servers up 46%, storage attached to AI servers up 70%, and 270% growth on their leading AI server platforms, L40 and I40. And finally, they confirmed a new billion dollar customer win, doing great.

Daniel Newman: Billion dollar?

Patrick Moorhead: Yeah. Going to finalize IDG on-devices, revenue up 7%, but everybody’s down, how does that work? Apple’s down, HP’s down, Dell’s down. Crazy stuff. And a good profit margin, in fact, their profit margin is higher than Dell’s PC unit. Crazy stuff.

Daniel Newman: How about 118% in that income this quarter, Pat?

Patrick Moorhead: Well, no, I know, on the PC side. But literally, their profit margin was higher than Dell.

Daniel Newman: Anyways, Dan, credit where credit’s due, my friend. And as we wrap-up here, you hit a lot of it on the head. I mean, look, I think everybody is going to pay attention to, one, how are they doing on the diversification of their business? Lenovo was long time the PC company, that was all people really knew it for, it aggressively, ambitiously, and took a pretty big risk to go hard into infrastructure and services, and now, Pat, it’s basically seeing its non-PC revenue making up almost half of its business. That’s a big monumental pivot. And so a lot of credit due there. We’re seeing pretty strong growth across, which you kind of hit on Pat, but the solution services growth, very, very strong. The ISG growth, good on revenue, but of course, services attached to ISG growth looked very, very encouraging. I do agree with you, Pat. I think if Lenovo wants to get the full credit, and get the full love of the streets, and the full love of the market, they’re going to have to get more granularity on their AI number. Dell, right now, has stolen the day.

Patrick Moorhead: Totally.

Daniel Newman: And partially, by the way, just because the way they report things, the outsiders were able to do the backwards napkin math and basically get it out, and now that’s kind of leaked out, and everybody’s kind of seeing it, looks like Dell’s getting the lion’s share of that particular opportunity against the other OEMs. Lenovo, if you have more to say, it would be good, love to share it, especially if it’s going directionally in a way that I would expect it to be. Pat, on the IDG side, look, the smartphone growth is really interesting. I’m guessing, Pat, it was largely outside of The U.S. where that growth was coming from, but I would have to do a little bit of digging to show that. But some of those foldables and stuff, very cool designs, Pat.

Very cool, very accessible, very reasonable. I have one, I think you have one. I like it. Growing up as a Chicago boy myself, Motorola was cool. Motorola was cool, and by the way, everybody out there, Lenovo, that’s the Moto, that’s the business. That’s the one that Google bought, and then sold on, and now Lenovo has it, and they’re starting to do good things with it. So credit to Lenovo for executing its plan. This is the quarter it’s needed. It’s had a few rough ones. This is a good turn to the positive for the company. I’ll be out in Raleigh with Kirk Skaugen myself to record a Six Five session, Pat. Where will you be? The John, or the Bond Street? What are you going to be doing, buddy?

Patrick Moorhead: Yeah, yeah, yeah, yeah.

Daniel Newman: Tell everybody what you’re doing, why they’re not going to see us next week on Friday.

Patrick Moorhead: So it’s been about 15 years before I’ve taken a proper vacation, and I’m going to be taking a two-week vacation with my family. I will be checking in and commiserating on the social medias, but I’m just… It’s been too long, and hanging out with the fam. But I appreciate you taking the baton, going to Computex and representing The Six Five. I appreciate that.

Daniel Newman: Hey, man. That’s why my blood pressure’s high.

Patrick Moorhead: Say hi for me when you’re out there. Ryan Shrout will be out there as well.

Daniel Newman: Signal65 crew. And Pat, I’ve got to run in a second, but can I give a shout-out to the business that you and I and Ryan put together this year? Signal65, and the amazing work that it has done on the AI PC, Copilot+ PC. If you have a chance, man, check out the report that we put out. It was published this week. It was cited in Tom’s Hardware, there was a MarketWatch piece. I mean, we are creating the future of testing performance, and analysis, and opinion on this. Great job to Ryan. Pat, of course, great job to you. I was a beautiful, but handsome, and also gorgeous innocent bystander in all of this. Kidding. But good job Signal, congratulations on all the work that you all have done. And Pat, I’ll let you take us home.

Patrick Moorhead: Hey, thanks for tuning in everybody. We’re going to take a two-week break as Pat is out. And I don’t know, maybe we’ll jump on, but probably not.

Daniel Newman: You’re going to miss me. Maybe not the first week, but I think the second week you’re going to be like, “I need to do a pod with Daniel. I’m dying.”

Patrick Moorhead: I think you’re probably right, particularly after what’s cooking at Computex.

Daniel Newman: Especially when bring Stacy and Dan on, and we do an episode without you.

Patrick Moorhead: Exactly. Exactly. All right, buddy. I’m jealous. Anyways, thanks for tuning in. Appreciate you dealing with Daniel and I. Don’t forget, we’ve got our Six Five summit kicking off in three weeks. We have 25 CEOs talking and more, talking thought leadership across everything from chips to SAS, and everything in between. Hit the sixfive.com. Take care. Bye-bye.

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.