Dell should keep shining in Nvidia’s halo
All those Nvidia chips have to plug into something. That’s turning into a very profitable reality for Dell. The 40-year-old company that started life specializing in made-to-order personal computers has become one of the hottest names in the artificial-intelligence craze.
Dell’s market value has more than tripled over the past 12 months. That began when Nvidia gave a blowout sales forecast indicating the level of demand for its chips by companies looking to build generative AI services such as ChatGPT. Dell’s stock price has also more than doubled since the beginning of the year.
Dell is one of the world’s largest tech companies by annual revenue, selling everything from PCs to data storage arrays to IT services and software. The AI boom is specifically benefiting the company’s server business as Nvidia’s GPU, or graphics-processing-unit, processors require specialized ones with high-performance memory and other key components. Investors’ enthusiastic reception sets a seemingly high bar for Dell ahead of its next earnings report, set for Thursday afternoon.
Dell’s server revenue beat Wall Street’s projections by 16% for the fiscal quarter that ended in July 2023, giving the stock a 21% lift the following day. In March, Dell reported that its AI server backlog nearly doubled during its fiscal fourth quarter. That sent the stock up 32% the following day.
Analysts expect the company’s server revenue to have jumped 31% year-over-year to a little over $5 billion in the April-ending quarter. That would be the best growth seen for that segment in more than four years. Super Micro Computer, a much smaller company that focuses on specialized AI servers, saw its revenue triple year-over-year during the March quarter.
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