Dell Technologies (DELL) founder and CEO Michael Dell believes rumors of a slowdown in AI spending are far exaggerated.
“There are always bumps in the road when you launch a rocket and create new possibilities. You have new product cycles. You have new introductions of things. And some customers want the existing ones faster. Others want to wait for the new ones. We have all of the above ,” Dell told Yahoo Finance at the Citi TMT conference in New York City on Wednesday.
“But the macro picture here is very, very clear, and that is that there is a huge demand. The demand is growing. It’s expanding from the hyperscalers to the service providers, to enterprises, to commercial to sovereign AI, to embedded AI, to the edge, to retail, to manufacturing to your PC, here, there and everywhere,” he added.
Dell’s second quarter underlined why the tech titan’s shares are up an impressive 45% year to date, in part because it is seen as a major player in building out America’s AI infrastructure.
The company said it brought in $3.1 billion in AI server sales in the quarter, nearly double the $1.7 billion netted in the previous quarter.
The company’s Infrastructure Solutions Group (ISG) revenue rose 38% to $11.65 billion. AI sales are captured in the ISG segment.
Dell’s Client Solutions Group – which includes PC and laptop sales – saw revenue fall 4% to $12.41 billion. Consumer sales fell 22% to $1.86 billion, while commercial activities were flat at $10.6 billion.
“What organizations see is that this is a historic opportunity to make their businesses much more productive and efficient, while at the same time reshaping them a little bit, given all these possibilities,” said Dell, who first founded the company in 1984.
Overall, the Street remains bullish on Dell’s stock because of its exposure to AI and because it seems too cheap to ignore.
“Combining the revenue opportunities [for AI] Over the medium term – increasing visibility of double-digit revenue growth for the core businesses and continued focus on operating costs – we see a robust earnings growth trajectory [for Dell] That is not fully appreciated at the 13x price-to-earnings multiple at which the stock currently trades,” JPMorgan analyst Samik Chatterjee said in a client note.
Chatterjee reiterated an Overweight rating on Dell stock, the equivalent of a Buy.
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