Dell Rises on Sales Outlook Boost

Dell continues with momentum. This is the fifth straight quarter where they basically raised their outlook. What do you see as the story behind that? Well, first, thanks for having me, Ed. It's just a powerhouse in the server area. And, you know, a few years back, Dell was considered dead or almost what I would call a dinosaur, but they're just you know, they've been great in terms on the server side. And it's not just the AI servers I'm going to point to. It's also their servers where the revenue was up over a 110 percent year over year because if you're gonna have AI servers, the corporations also need their traditional server infrastructure upgraded. I'm looking at Dell shares on a sort of longer time horizon. So even year to date, actually, 252% gain. But it took some time for them to get credit or at least for, like, the market to understand. You need to have a Dell to put the server design together. Do you expect this to be a name that continues to have momentum on the equity side? I do because they're the leader in this space, and they are very good in terms of their competitive advantages. They have a great breadth of products. Their supply chain is phenomenal. Their client relationships are great, and they've also been in the process of going through an optimization program in terms of cleaning out the product lines that aren't gonna work and maximizing their margins. That's another thing I think they don't get enough credit for. This year, their operating margins were over 11%. Last year, they were six. I mean, that's a huge win. I wanna zoom out here for some perspective and look at today's big number, which is $32,000,000,000,000. Yes. Trillion. And that's how much data center spending is expected to reach by the year 2050 according to a report by PwC. So, Michelle, I don't know how you feel about such reports from the likes of PwC. But on your point there on the margin expansion, right, the story on the technology side has been that NVIDIA dominates the content ownership of the server. You know, Dell doesn't really contribute that much to it. But if we get to that that $32,000,000,000,000 number, surely Dell is gonna take a big slice of that market. Definitely the case because they've got the entire company lined up to continue to take share, and they're by far away the number one player in the server and AI server space. So, yes, if that survey is correct, which is very interesting because the last survey I saw was through 2030 going to 8,000,000,000,000, but now we're looking at 32,000,000,000,000. As you said, that's a huge number, and Dell will definitely benefit. And I think a lot of analysts on the sell side are seeing that, and you're seeing a lot of the estimates today push up by quite an amount. More broadly, across all the layers of the AI stack, where are you most focused right now? What are you looking at most closely? I started my career as a semiconductor analyst, and so I still, am attracted to what's going on there on the public side as well as the private side. And you're gonna see more and more, focus on the fact that it's not just customization by Broad com or others, but you had NVIDIA buying MediaTek. And there are other, private semiconductor firms that we're gonna start hearing more about because copper is not going to make do with these chips in terms of transmitting the data. We need optics. We need other materials involved. And as this happens, the semiconductor story is going to broaden out, and there are gonna be a lot more winners. And there's gonna be some market share losses along the way. In the private markets, we've seen that manifest in particular in specialized inference platforms being able to you know, I'm trying to think of one as a good example. When you say there'll be market share changes, who loses out in that context? I don't have exact names on that, but, you know, things are moving so quickly. You know? You know, you have NVIDIA that is smart enough to make these partnerships and make these acquisitions. But if you do not have the war chest to do that, maybe something like a Broadcom may have more problems in front of it. That's why the earnings announcement today is going to be very interesting and see if they're going to be able to prove that their AI revenue can stay within the 120,000,000,000 to a 150,000,000,000. How high or low has the bar been set for Broadcom? Really interested in what you just said after the shocker of NVIDIA's earnings last week where they gave us a a rare fiscal year outlook for growth of 70%, which was modeled on supply. It wasn't a growth outlook based on demand, but supply. Can you extrapolate through to Broadcom? I think they will benefit in the short term from the same issue. Last night when I was listening to, I think, it's Semicon over in Taiwan, the main theme was supply. There is not enough supply. So in the short run, the main players will benefit from that, but that may change with time. And as the means of building these small chips as it gets smaller and as the amount of data is being communicated increases, the chairs are going to change in terms of who's winning and who's losing share.