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On Tuesday, Loop Capital revealed that Apple (NASDAQ: NASDAQ:AAPL) is making a significant move into the next generation of artificial intelligence by engaging in the large server cluster Gen AI space. The firm highlighted that Super Micro Computer, Inc. (NASDAQ:SMCI) and Dell Technologies (NYSE:DELL) are the primary server partners in this new venture. Dell, with its market capitalization of $69.64 billion and position as a prominent player in the Technology Hardware sector, stands to benefit significantly from this partnership. According to Loop Capital’s analysis, Apple’s recent issues with its voice assistant Siri have prompted a strategic shift within the company, leading to a substantial investment in advanced AI infrastructure.Want deeper insights into Dell’s financial health and growth potential? InvestingPro offers exclusive analysis and 12 more expert tips about Dell’s performance.
Apple is reportedly in the process of ordering approximately $1.0 billion worth of GB300NVL72 servers, equating to around 250 units priced between $3.7 million and $4.0 million each. These servers, sourced from both SMCI and Dell, are expected to form a cluster capable of handling large language models (LLMs), which are a cornerstone of generative AI technologies. For Dell, which reported $95.57 billion in revenue with an 8.08% growth rate over the last twelve months, this deal represents a significant opportunity to strengthen its enterprise hardware business.
Loop Capital’s initial investigations suggest that part of the reason behind Siri’s persistent problems may be Apple’s previous reliance on traditional AI and machine learning approaches rather than generative AI. This new direction towards generative AI, as opposed to the conventional AI and machine learning methods previously utilized by Apple, indicates a potential paradigm shift in the company’s approach to AI development.
The investment in these high-value servers is seen as a move by Apple to enhance its AI capabilities significantly, potentially improving the performance and capabilities of Siri and other AI-driven services. The partnership with SMCI and Dell underscores the importance of robust server infrastructure in the development and deployment of advanced AI systems.
As Apple embarks on this transition, the tech industry will be watching closely to see how the integration of generative AI will influence the company’s product offerings and competitive stance in the rapidly evolving AI landscape. According to InvestingPro data, Dell appears undervalued based on its Fair Value analysis, with analysts maintaining a strong buy consensus. The company’s attractive P/E ratio of 15.67 suggests potential upside as it capitalizes on the growing AI server market.
In other recent news, Dell Technologies reported its fourth-quarter 2025 earnings, surpassing analyst expectations with an earnings per share (EPS) of $2.68, compared to the forecasted $2.51. However, the company reported a revenue of $23.9 billion, falling short of the anticipated $24.55 billion. Dell’s Infrastructure Solutions Group (ISG) experienced significant growth, with revenue increasing by 22% year-over-year to $11.4 billion, driven by a 37% rise in its server and networking segment. Dell also announced new AI solutions in collaboration with NVIDIA (NASDAQ:NVDA), introducing expanded infrastructure offerings, including the Dell Pro Max series and forthcoming PowerEdge servers. Analyst firms have recently adjusted their outlook on Dell, with Loop Capital and UBS lowering their price targets to $130 and $150, respectively, while maintaining a Buy rating. Mizuho (NYSE:MFG) Securities also cut its price target to $140 but reiterated an Outperform rating, citing Dell’s strong position in the AI server market. Despite these adjustments, analysts expect robust growth in Dell’s AI server segment, projecting revenues to reach at least $15 billion by fiscal year 2026.
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