00:00Dell continues with Momentum. This is the fifth straight quarter where they basically raise their
00:06outlook. What do you see as the story behind that? Well, first, thanks for having me, Ed.
00:12It's just a powerhouse in the server area. And a few years back, Dell was considered dead or almost
00:20what I would call a dinosaur. But they've been great in terms on the server side. And it's not
00:27just the AI servers I'm going to point to. It's also their servers where the revenue was up over
00:34110% year over year. Because if you're going to have AI servers, the corporations also need their
00:41traditional server infrastructure upgraded. I'm looking at Dell shares on a sort of longer time
00:48horizon. So even year to date, actually, 252% gain. But it took some time for them to get credit
00:55or at
00:55least for the market to understand. You need to have a Dell to put the server design together.
01:01Do you expect this to be a name that continues to have Momentum on the equity side?
01:06I do, because they're the leader in this space. And they are very good in terms of their competitive
01:13advantages. They have a great breadth of products. Their supply chain is phenomenal. Their client
01:19relationships are great. And they've also been in the process of going through an optimization
01:24program in terms of cleaning out the product lines that aren't going to work and maximizing their
01:31margins. And that's another thing I think they don't get enough credit for. This year, their operating
01:37margins were over 11%. Last year, they were six. I mean, that's a huge trend.
01:42I want to zoom out here for some perspective and look at today's big number, which is $32 trillion.
01:51Yes, trillion. And that's how much data center spending is expected to reach by the year 2050,
01:58according to a report by PwC. So, Michelle, I don't know how you feel about such reports from the likes
02:04of PwC. But on your point there on the margin expansion, right, the story on the technology
02:09side has been that NVIDIA dominates the content ownership of the server. You know, Dell doesn't
02:14really contribute that much to it. But if we get to that $32 trillion number, surely Dell is going to
02:21take a big slice of that market. Definitely the case because they've got the entire company lined up
02:29to continue to take share. And they're by far away the number one player in the server and AI server
02:35space. So, yes, if that survey is correct, which is very interesting because the last survey I saw
02:41was through 2030 going to $8 trillion, but now we're looking at $32 trillion. As you said, that's a huge
02:48number and Dell will definitely benefit. And I think a lot of analysts on the sell side are seeing that
02:54and you're seeing a lot of the estimates today push up by quite an amount.
03:00More broadly, across all the layers of the AI stack, where are you most focused right now? What are you
03:05looking at most closely? I started my career as a semiconductor analyst, and so I still am attracted
03:14to what's going on there on the public side, as well as the private side. And you're going to see
03:21more and more focus on the fact that it's not just customization by Broadcom or others, but you had
03:29NVIDIA buying MediaTek. And there are other private semiconductor firms that we're going to start
03:36hearing more about because copper is not going to make do with these chips in terms of transmitting
03:44the data. We need optics. We need other materials involved. And as this happens, the semiconductor story
03:52is going to broaden out and there are going to be a lot more winners. And there's going to be
03:57some
03:57market share losses along the way. In the private markets, we've seen that
04:03manifest in particular in specialized inference platforms. I'm trying to think of one etched
04:09is a good example. When you say there will be market share changes, who loses out in that context?
04:17I don't have exact names on that, but things are moving so quickly. You have NVIDIA that is smart
04:26enough to make these partnerships and make these acquisitions. But if you do not have the war chest
04:31to do that, maybe something like a Broadcom may have more problems in front of it. That's why the
04:38earnings announcement today is going to be very interesting and see if they're going to be able
04:42to prove that their AI revenue can stay within the $120 billion to $150 billion.
04:51How high or low has the bar been set for Broadcom? I'm really interested in what you just said
04:58after the shocker of NVIDIA's earnings last week, where they gave us a rare fiscal year outlook for growth
05:06of 70%, which was modeled on supply. It wasn't a growth outlook based on demand, but supply.
05:12Can you extrapolate through to Broadcom? I think they will benefit in the short term
05:18from the same issue. Last night when I was listening to, I think it's Semicon over in Taiwan,
05:26the main theme was supply. There is not enough supply. So in the short run, the main players will benefit
05:33from that. But that may change with time. And as the means of building these small chips,
05:40as they get smaller, and as the amount of data is being communicated increases,
05:46the chairs are going to change in terms of who's winning and who's losing share.
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