It appears that Dell Technologies and Hewlett Packard Enterprise, the two largest original equipment manufacturers globally, are poised to capitalize on the rise of generative AI technology. This opportunity stems from their improved access to GPUs from Nvidia and AMD, enabling them to cater to customers beyond hyperscalers and major cloud providers.
While Dell and HPE have faced challenges due to a slowdown in general server spending, they are now gearing up for a resurgence in server investments, particularly in the AI segment. Both companies are well-positioned to offer CPU and GPU systems to a broader customer base as the demand for AI solutions grows across various sectors.
Dell’s recent financial report for the fourth quarter of fiscal 2024 reflects a decline in sales but a notable increase in net income, driven by the higher margins from AI server sales and stringent cost controls. The company’s Infrastructure Solutions Group witnessed sequential growth, indicating a positive trend in server and storage revenues.
On the AI front, Dell experienced a surge in AI server orders and a significant backlog, showcasing the strong demand for AI-optimized solutions. Despite GPU supply constraints, Dell remains optimistic about the future and is actively engaging with customers to meet their AI infrastructure needs.
Looking ahead, Dell anticipates continued growth in AI server sales and a rebound in traditional server and storage segments. The company’s financial outlook for fiscal 2025 underscores a positive trajectory, with expectations of revenue growth and increased market share in the AI server domain.
In contrast, Hewlett Packard Enterprise (HPE) faced revenue declines in the first quarter of its fiscal 2024, reflecting challenges in the server and hybrid cloud divisions. HPE’s strategic realignment, including the integration of storage offerings into the Hybrid Cloud division, aims to position the company for future growth opportunities.
HPE’s core systems business, which includes server sales and subscription-based services, showed a decline in revenues but a slight improvement in profitability compared to the previous quarter. The company’s focus on accelerated processing units (APUs) in server orders indicates a shift towards AI and HPC solutions to drive future revenue streams.
Despite the market challenges and GPU supply constraints, both Dell and HPE are adapting to the evolving landscape of AI and server technologies. Their strategies to address customer needs and enhance product offerings reflect a proactive approach to stay competitive in the dynamic IT market.
