“All in, we're hearing more AI server speeds at Dell than any other OEM,” Woodring wrote, adding that he expects AI server revenue of about $10 billion in the company's fiscal year 2025. – which expire next February.
Wednesday's move was the biggest since March 1, when the stock rose after earnings said the computer maker had benefited from the AI boom.
Dell shares are now up more than 95% in 2024, trailing rival AI server maker Super Microcomputer's 220% gain but beating Hewlett Packard Enterprise's 5% gain this year.
Most AI servers are built around Nvidia's chips, which have become valuable in the technology industry as they are used to deploy advanced AI models from companies like Google, OpenAI and Meta. Dell sells servers using the latest Nvidia AI chips, including its H100 GPU and the latest Blackwell generation chips.
At Nvidia's annual conference in March, Nvidia CEO Jensen Huang was seen sending customers who want the latest AI chips a deal to order.
“You need an AI factory,” Huang said. “And nobody is better at building end-to-end systems for the enterprise at scale than Dell.”
“Michael [Dell] is here and is happy to take your order,” Huang continued.
“While near-exponential ramps in Nvidia GPU shipments and AI servers make it difficult to quantify growth,” Woodring wrote, he remains confident in Dell's business for a variety of reasons. Among these reasons is the strengthening demand for AI servers and the fact that it is increasing Dell's market share.
He wrote that Dell may be able to sell to its customers and “attach” additional hardware such as data storage.
Dell is expected to announce its April quarter earnings later this month. Nvidia reports earnings for the quarter ending in April next week.
Dell's other business, making PCs for consumers and businesses running Microsoft Windows, could get a boost next week when Microsoft unveils new capabilities at its conference, including long-awaited AI. Features that many analysts expect to drive demand for new PCs.
PC sales have fallen for two years in a post-pandemic hangover, as consumers and businesses buying new machines during 2020 and 2021 push back the timeline for their next upgrade.
But the PC industry is on track to grow again and is outperforming lower expectations, which should benefit Dell, Woodring wrote.
Woodring wrote, “We're excited about the recovery in the PC market as we're hearing not only about upgrade/refresh demand in our recent CIO and VAR checks, but an upward revision in notebook ODM builds in recent months. Also watching.”