Michael Dell, founder and CEO of Dell Technologies, believes talk of a decline in spending on artificial intelligence is greatly exaggerated.
“There are always bumps in the road when you launch a rocket and innovate new capabilities,” Dell said at the Citi technology, media and communications conference in New York City on Wednesday. “You have new product cycles. You have new things coming out. Some customers want to get the current product faster. Some customers want to wait until the new one comes out. We have all of that.”
“But the big picture here is very clear, which is that there is massive demand. It is growing. It is expanding from large enterprises to service providers to enterprises to commercial enterprises to sovereign AI to embedded AI to the edge to retail to manufacturing to your computer to here, there and everywhere,” he added.
Dell’s second quarter underscored why the tech giant’s shares are up 45% so far this year, in part because it is seen as a major player in building America’s AI infrastructure.
The company said it generated $3.1 billion in sales from AI servers in the quarter, nearly double the $1.7 billion it generated in the previous quarter.
The company’s Infrastructure Solutions Group (ISG) sales increased 38% to $11.65 billion. AI sales are reflected in the ISG segment.
Sales at Dell’s Client Solutions Group, which includes PCs and notebooks, fell 4% to $12.41 billion. Consumer sales fell 22% to $1.86 billion, while business sales were flat at $10.6 billion.
“What organizations see is that this is a historic opportunity to make their businesses more productive and efficient, and at the same time, kind of reimagine them given all this potential,” said Dell, who first founded the company in 1984.
Overall, the street remains bullish on Dell stock because of its exposure to AI and because it seems too cheap to ignore.
“Combining the medium-term revenue opportunity (for AI) – which increases visibility into double-digit revenue growth for the core business – and the continued focus on opex, we see a strong path to earnings growth (for Dell) that is not fully appreciated at the 13x P/E multiple the stock is currently trading at,” JPMorgan analyst Samik Chatterjee said in a note to clients.
Chatterjee reiterated an “overweight” rating on Dell shares, which is equivalent to a “buy.”
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