Dell has informed traders that demand for AI servers has surged, however consumers can be compelled to attend 39 weeks to get their fingers on the {hardware} attributable to provide chain constraints.
Talking on the computing large’s Q3 2024 earnings name, vice chair and COO Jeff Clarke mentioned Dell shipped half a billion {dollars} value of AI servers within the quarter, and noticed demand almost double sequentially. The PowerEdge XE9680 – a server sporting a fourth-gen Intel Xeon processor and able to internet hosting eight Nvidia GPUs, has grow to be “the quickest ramping resolution in Dell historical past,” Clarke boasted.
“Our AI-optimized server backlog almost doubled versus the tip of Q2 with a multibillion-dollar gross sales pipeline, together with rising curiosity, throughout all areas,” he added.
Dell managed to triple its pipeline for AI servers within the quarter. However even that effort left the {hardware} titan with a lead time of 39 weeks.
“We’re working now to transform that pipeline into actual gross sales into orders, so we will proceed to ship and profit from this thrilling time,” Clarke enthused.
Wells Fargo analyst Aaron Rakers pressed Clarke on the 39-week delay, which the Dell exec pinned firmly and solely on Nvidia, earlier than welcoming the appearance of extra opponents.
“As we glance ahead into calendar 12 months ’24, there’s clearly alternate options coming,” Clarke conceded. “There’s work to be accomplished in these alternate options – software program stacks should be taken care of, resolve the alternatives round them. However there’s extra choices coming.
“Their adoption charge, we’ll see. However proper now, that multi-billion-dollar pipeline that I referenced, the backlog that we have talked about is Nvidia-based 39-week lead time. We’re working our behinds off daily to get extra provide.”
He later mentioned Dell is “hand-in-mouth for elements.” We predict he meant “hand-to-mouth” however you get the thought: even mighty Dell, the planet’s greatest enterprise {hardware} participant, is struggling to get Nvidia GPUs.
Dell’s Q3 income landed at $22.3 billion – down ten p.c year-over-year. Internet revenue of $1.04 billion was up 317 p.c. Working revenue of $1.49 billion was down 16 p.c.
Accountants do like to take a look at a enterprise from a number of angles. Dell’s view of its numbers was that macro-economic circumstances prompted its dip.
The Infrastructure Options Group – which does servers, storage, and networking equipment – accounted for $8.5 billion of income, which was flat sequentially and down 12 p.c year-over-year. The Group produced $1.1 billion in working revenue. Clarke noticed “inexperienced shoots” in typical servers, with two quarters of sequential development and consumers lastly wanting so as to add capability after their spending surge within the early months of the COVID-19 pandemic,
The Consumer Options Group, Dell’s PC limb, gained income of $12.3 billion – $9.8 billion of it from business clients.
An anticipated bounce in PC demand throughout Q3 did not occur. Clarke defined that it has “pushed out” as a result of huge company consumers have been “cautious with their spending.”
“The PC set up base continues to age, and there are thrilling modifications coming to the PC subsequent 12 months, together with advances in AI-enabled architectures from Intel, AMD and Home windows on Arm, which is able to assist drive a PC refresh cycle,” Clarke predicted, describing the market as “ripe for a refresh.”
“There will be 300 million PCs turning 4 years outdated subsequent 12 months. That is sometimes a tipping level for upgrading in business. And most of these are notebooks. As all people was working distant, the pocket book combine went up … they’re ageing in time to refresh.”
Two issues to notice there:
- Dell is about to inform your boss it is time for a brand new laptop computer, and The Register sees little purpose to argue;
- That Home windows on Arm remark, pricey reader, isn’t any small factor – would possibly Dell dabble in Arm-powered PCs?
Clarke predicted a return to development in FY 2025, however delay extra detailed steering for subsequent 12 months till the enterprise reviews its This fall outcomes. ®
