Dell Sees Surge in AI Server Sales, Boosts Outlook

Looks like you're going to do well after this earnings report. The shares is now up about 8%. But this is a stock that already have been doing well this year largely based on this sort of uh I don't know if you want to call it a reinvention, but certainly this reinvigoration from selling AI servers. Great to be here, Romain. And I think you're right, Dell has had a great year up to 200 plus percent already year to date. But I think that they're earning that premium valuation with the numbers that we're seeing today. So not only is the AI server business growing very rapidly, their traditional business is growing as well with expanding margins. We'll talk a little bit about how they protect those margins, because it seems like anytime we talk about these revenue growth numbers, these same companies are also talking about supply chain constraints, their own costs. And I know some of them have the pricing power to be able to pass that on the Dell and that Dell's demonstrating a lot of pricing power. So yes, some of their component costs are going up, but they're able to pass this on to their customers and even take more margin. So where does the longer term growth story comes in? Because it seems to be where the euphoria is. They're guiding for basically into 2020 7th January 2027, uh, for that fiscal year. But it gets also to this idea. You had Jensen Wong come out, uh, a week and a half ago, whenever it was, and he's basically talking about 20, 28. You have a lot of companies now saying that, uh, the tightness that we're seeing in the components, uh, the demand that we're seeing with regards to, uh, what people want, that that is a multi-year story. It is not something that's just going to Peter out this year or next year. You believe that? We believe that. I've seen some data that shows that there's only 100,000 to maybe a half a million people actually using generative AI. So I think we're just at the beginning of that curve. And Dell will continue to be the beneficiary because all of that GPO demand, they're the ones who are packaging it, putting it in the rack and building it out for customers for their token factories. And what do you want? I mean, so you're pretty happy with with the progress the company has made. What do you want to hear from them, though, uh, as to how they make sure that that continues and it continues unabated. Because the other issue, too, is there's a lot of competition coming into this space. Uh, way more than even just a year ago. And I'm sure they have to take that into account. Uh, certainly do. But, you know, our investing style, as you know, is to bet on the founders. Michael Dell is one of the original founders. Uh, dominates the supply chain. That's one of the reasons he's able to keep his costs down and passes. Take, uh, pricing power with his customers. So as long as they continue to innovate into all of these changes that are happening in the AI data center, that's the main thing that we're watching for. Is do they continue to be the preferred packager to put the put the servers into the racks? Uh, in the in the data centers? Well, what's the main risk, though, that you look out for? And not just with Dell specifically, but overall with, uh, the I server build out the I infrastructure, build out. What's the main risk that you look to in any of these revolutionary changes? We certainly will have a period of over investment of capital. I don't think we're anywhere close to that given the numbers that we're seeing. So I was around for the.com boom. But remember, during then the companies weren't profitable. We were putting dark fiber into the ground. Every one of these data centers is sold out the day before. We light power to it. So I think we're at a different point. Could we have over investment at some point? We certainly could. But I don't think we're at that point of the cycle yet.