Dell Technologies (DELL) can almost double the order backlog for AI-optimized servers in Q4 compared to the previous quarter. Customers are still at the beginning of their AI journey.

Dell Technologies (DELL) reported better-than-expected Q4 figures on Thursday (February 29). The company appears to have positioned itself well in the field of AI and can benefit from the emerging momentum. Dell is experiencing continued strong demand for its AI-optimized server portfolio.

PowerEdge XE9680 is the fastest growing solution in the company's history
In ISG, traditional server demand grew year-over-year and for the Third consecutive quarter. Storage demand grew beyond normal seasonality, although it declined year-over-year as expected. Dell believes it is prepared for the broader adoption of AI by enterprise customers and the projected growth in unstructured data, where it is well positioned with industry-leading storage solutions. The company is helping customers develop Gen AI solutions that meet their performance, cost and security requirements. Orders for AI-optimized servers increased by almost 40% compared to the previous quarter. Dell shipped $800 million worth of AI-optimized servers, driven by the flagship PowerEdge XE9680. The order backlog has almost doubled compared to the previous quarter. The PowerEdge XE9680 is the fastest growing solution in the company's history. Dell is seeing strong interest in orders for AI-optimized servers equipped with the next generation of AI GPUs, including NVIDIA's H200 and AMD's MI300X. However, according to management, most customers are still in the early stages of their AI journey.

AI-enabled computers should trigger a PC renewal cycle
In the area of consumer products such as laptops, desktops and peripherals (CSG), the PC market is still weak. Management expects the recovery to continue in the Second Half of the year, although companies and major customers remain cautious with their investments. However, the industry is making progress with AI-enabled architectures and software applications. PCs will become even more important in the future, as most day-to-day work with AI is done on the PC. The market opportunity in the AI hardware & services sector is large: this is expected to grow at an average rate of 20% until 2027.

Significantly higher profit despite decline in sales - New AI solutions to be presented in May.
Despite a significant decline in sales, the company generated earnings per share of $2.20 in Q4, 22% more than in the same quarter of the previous year. Analysts had expected just $1.72. The company announced that it will present a range of new products and solutions at Dell Technology World in May that will make it easier for customers to get started with AI.

Dell Technologies (ISIN US24703L2025): The company is driving disproportionate growth in AI servers. The traditional server business is gaining momentum. The storage business will benefit from the expected exponential growth in unstructured data. Management is also optimistic about the coming PC renewal cycle. The share price can post significant double-digit gains on Friday.

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