00:00Did the results that we got from Dell yesterday that are causing the stock to surge higher today,
00:05does that completely change how you look at demand for this technology?
00:10Hey, Tim, that's the best question I've received all day.
00:15It's fine. It's fine. I don't want to have to follow that.
00:18That's fine. Not a problem.
00:20I mean, look, a cyclical move or a better than expected cyclical move like this
00:28doesn't drive a stock like this.
00:29This is more of a structural move.
00:31What's happening is that the demand for compute,
00:34there's a big shortage in the demand for compute,
00:37and I think that is not only driving the AI server demand,
00:41but also the traditional server demand.
00:43That might be durable beyond fiscal 27 or calendar 26, but into 27 and 28.
00:51Okay, so for the uninitiated who are going to ask less amazing questions than Tim Sedovic,
00:57where are you really seeing this?
00:59I mean, I was surprised looking through this as well that, yes, it is a lot of AI.
01:02It is a lot of servers.
01:03When you look at the breakdown between software and hardware, what is driving this,
01:07or is it a combination of both?
01:09Yeah, so let's break down the numbers in terms of the guidance increase, right?
01:15If we look at the guidance increase, they raised their guidance by about 25 to 27 billion.
01:21AI servers, they raised it by about 10 billion, from 50 billion to 60 billion.
01:26Look, those are fantastic numbers, quite frankly, but the rest of the business,
01:32traditional servers, PCs, storage, that went up 15 to 17 billion in terms of the guidance.
01:39So what it's telling me is that traditional server business,
01:42as well as PC business, is stronger than expected.
01:45Now, what's driving some of that is because of the memory inflation
01:51that's pulling forward a lot of demand so they want to avoid higher prices.
01:56But I do think that there's legs to this demand
01:59because margins are going up in the back half of this year.
02:03So we are talking about durability of the traditional businesses,
02:06which is supposed to be a, you know, I've heard the term dinosaur a lot,
02:10which is supposed to be a dinosaur business.
02:11It no longer is.
02:12So who right now is doing the buying?
02:15Are these firms that are doing inference and they've moved past training, Wujin?
02:20Yeah, no, it's, you know, if you think about the, from the AI server standpoint,
02:25it's the neoclouds as well as the sovereigns.
02:27Think about the core weaves of the world, the nebbias of the world,
02:31you know, even G44 out in the Middle East,
02:34they're not seeing a slowdown on that demand at all.
02:37If anything, we're still in the early innings of that demand uptick.
02:41I'm wondering, as you look at the places that they grew
02:43and some of the companies that are choosing Dell to rent that computing power,
02:46you've got CoreWeave, you've got N-Scale Global Holdings,
02:49as well as a lot of corporate clients and major AI providers.
02:52Why does Dell have an edge here?
02:54What are they doing differently that's drawing these companies kind of into the fold?
02:58Well, as a throwback to the 90s, you've got to get a Dell.
03:01Yeah, dude, you're getting a Dell.
03:03There's also this great meme that, I don't know if you've seen it,
03:06that if you onboard to a company and they hand you a MacBook,
03:09you should be concerned about a bubble or a startup flop.
03:13But if you onboard and they hand you, like, an old Dell, you know you're good.
03:17That's stability. Like, you know where you're at.
03:19What a world.
03:19And I think you have the point right there, right?
03:22Because there's a couple of things that's going on in all seriousness.
03:26We're talking about a company that, like, excluding the AI business,
03:30we're talking about a $100 billion business.
03:33They have the operational scale, they have the distribution scale,
03:36and also the supply scale, right?
03:38There aren't many companies that can do that.
03:40And when you need your AI servers tomorrow or the time when you need it,
03:44there are only a handful of companies that can do it.
03:48Dell, Supermicro, and Lenovo.
03:50And from a scale perspective, I put my money on Dell.
03:52Why?
03:54Well, primarily because they have the supply chain relationships.
03:59They have, and when I talk about supply chain relationships,
04:02they have the NVIDIA relationships.
04:03So if you know that you can get the GPUs,
04:05have it assembled and manufactured correctly,
04:08and shipped on time when you need it,
04:11again, Dell is one of the top-notch executors
04:14in terms of the AI server story.
04:16Yeah, and this year, Woojin, shares of Dell are up a whopping 220,
04:24wow, 280%, 290, sorry, 230% at this point.
04:29Just very briefly, 10 seconds.
04:31Is this concerning at all to you?
04:33Right now, if it is a structural change, it's not.
04:36You should see a multiple re-rate.
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