Dell at Bank of America Global Tech Conference: AI Drives Growth

On Tuesday, 03 June 2025, Dell Technologies (NYSE:DELL) presented at the Bank of America Global Technology Conference 2025, offering insights into its strategic direction and performance. Arthur Lewis, President of Dell’s Infrastructure Solutions Group, highlighted the company’s robust growth in AI-driven solutions, alongside challenges such as supply chain complexities and the need for server upgrades.

Key Takeaways

• Dell reported strong Q1 results with a 12% year-over-year increase in ISG revenue.
• AI server orders reached $12.1 billion, with a backlog of $14.4 billion.
• The company aims to exceed $15 billion in AI revenue for the year.
• Dell is focusing on innovation across compute, storage, and network solutions.
• The company is effectively managing supply chain challenges, including tariffs.

Financial Results

• Q1 2025 Results:

- ISG revenue reached $10.3 billion, a 12% increase from the previous year.

- Operating margins grew to $1 billion, marking a 36% year-over-year growth.

- AI server bookings totaled $12.1 billion, with a backlog of $14.4 billion.

• Growth Trends:

- ISG achieved five consecutive quarters of double-digit revenue growth.

- The server business grew by 16%, while the storage portfolio expanded by 6%.

• Future Guidance:

- AI revenue is anticipated to surpass $15 billion this year.

- Q2 revenue is expected to grow by $5 billion sequentially, with operating margins increasing by $500 million.

Operational Updates

• AI Initiatives:

- Dell is collaborating with large tier two CSPs to deliver tailored AI solutions.

- The company deployed 100,000 GPUs in six weeks and was the first to deploy NVL 72.

• Product Transitions:

- Dell is navigating rapid technological advancements, introducing new super chips every six months.

• Supply Chain Management:

- Dell has embedded tariff management into its Q2 guidance, reflecting its long-standing expertise in handling geopolitical issues.

Future Outlook

• AI Growth:

- Dell’s AI revenue is on track to exceed $15 billion this year, with a focus on expanding margins.

• Market Segments:

- Tier two CSPs dominate the market, with sovereign opportunities emerging.

- Dell is helping enterprises define future data strategies, focusing on AI use cases like content creation and customer service.

• Technology Innovation:

- Dell is leading innovation across its compute, storage, and private cloud portfolios, with projects like Lightning and parallel file systems enhancing AI workload data access.

Q&A Highlights

• AI Server Revenue and Profitability:

- Sequential revenue is expected to grow by $5 billion, with operating margins increasing by $500 million.

• Industry Standard Servers:

- Dell noted a slowdown in demand, prompting a revision of market growth expectations to 4-5%.

- 75% of the installed base consists of 14th generation or older servers, presenting opportunities for upgrades to the 17th generation.

• Geopolitical Risk:

- Dell has been adeptly managing tariffs since 2016, with all known factors accounted for in current guidance.

In conclusion, Dell’s presentation at the Bank of America Global Technology Conference 2025 highlighted its strategic focus on AI and innovation, positioning the company for continued growth. For a more detailed account, please refer to the full transcript below.

Full transcript - Bank of America Global Technology Conference 2025:

Wamsi Mohan, Bank of America Analyst, Bank of America: Let’s go ahead and get started. Good morning, everyone. Welcome to day one of Bank of America’s Global Tech Conference. I’m Wamsi Mohan. I cover IT hardware and supply chain here for the bank.

Appreciate all of you being here today. I’m especially delighted to welcome Dell again to our conference. This year, we have Arthur Lewis, who’s President of Infrastructure Solutions Group, ISG, which covers all of servers, storage, networking services. So amazing portfolio, which has been doing incredibly well. So we’re super excited to have Arthur over here, especially at the time when there’s so much talk around and excitement around AI.

And Dell has definitely been in the lead over here with some of its products, recent announcements at Dell Tech World. So super excited to have you over here out there.

Arthur Lewis, President of Infrastructure Solutions Group, Dell: Thank you, Wamsi. Great to be here. Good to see everybody. Good morning.

Wamsi Mohan, Bank of America Analyst, Bank of America: Well, fantastic. Well, I know we’ve got like just only thirty minutes over here and there’s so much to cover, but maybe to kick it off Arthur, could you just talk about sort of some of the things that as you just closed out last quarter, what you saw some of the puts and takes from the quarter first, and then we can get into other topics.

Arthur Lewis, President of Infrastructure Solutions Group, Dell: Yeah. So let me, you know, break down the quarter for you, Wamsi. So, you know, from an overall I g ISG perspective, $10,300,000,000 in revenue, which was 12% growth year over year. That represented our fifth consecutive quarter of double digit revenue growth, which was pretty exciting. Operating margins came in at about a billion dollars, growing 36% or three times faster than revenue, and that’s four consecutive quarters of double digit growth.

Right? So great top line and and bottom line growth for q one. If I break it down into sort of the three main components there, you know, clearly a blockbuster AI quarter. You know, three things I, you know, I would call out for you guys here is, one, you know, record orders, bookings of $12,100,000,000. And, you know, to put that number in perspective, that’s greater than everything that we shipped last year just in our first fiscal quarter.

Number two, you know, we have a backlog of $14,400,000,000, which is another record for us. But importantly, the third point is that, you know, we take a look at the next five quarter pipeline as being indicative of demand. And even though we took in $12,000,000,000 of orders, our net next five quarter pipeline grew sequentially and continues to be multiples of our backlog even at $14,400,000,000. So, again, very indicative of the demand that’s out there around what is a very revolutionary technology. The server business also, you know, continued to grow six consecutive quarters on a demand basis, five consecutive quarters on a p and l basis.

The overall server networking business all in grew 16%. As we said on the call, Wamsi, there’s a little bit of slowdown that coincided with April 2. I think something happened on that day. And so we saw, you know, kind of a slowdown from, you know, week 10 to 12, so we’re monitoring that very closely. And the storage portfolio was great.

Right? It grew 6%. We expanded profitability. It was the third consecutive quarter. This pushed the third consecutive quarter of of growth.

You know, this this push that we’ve had towards Dell IP is really working out, and you can see sort of the proof points with PowerStore in particular growing five consecutive quarters double digits, and our growth rate in q one was the highest growth that we’ve seen in PowerStore in the last twelve quarters. And importantly, something that I pay a lot of attention to is that PowerStore drove 15% new buyers I’m sorry, 15% buyer growth. 45% of those buyers were new to PowerStore, which is great for share of wallet expansion with existing customers, but 18% of those buyers were new to Dell. So it’s also a great acquiring engine. So you know?

And then we had PowerProtect data domain or the PowerProtect portfolios group, excuse me, growing double digits as well. So this push into Dell IP storage is really doing well for us. And, you know, we have the headwind with VxRail. So the Dell IP portion actually grew faster than p and l average, which is something that we like to see, especially when the market is growing in the three to 4% range.

Wamsi Mohan, Bank of America Analyst, Bank of America: No, that’s amazing. Thank you for that recap. Clearly a very strong print over here. As you think about just the server revenues that you just accomplished, your backlog and pipeline, you just noted extremely strong guiding to very strong revenues here in the near term. Help us think through sort of the revenue trajectory as we go forward around AI and also the incrementals of from a profitability standpoint that investors should think about as you’re getting this revenue stream?

Arthur Lewis, President of Infrastructure Solutions Group, Dell: Yeah. Let me touch on your first point first or your last point first and your first point second. From a profitability perspective, know, we kinda take a look at the three independent businesses. Right? Whether it’s the AI business, the server business, traditional server business, the storage business.

And each of these business sequentially, we see expansion of gross profit of operating margin dollars and rate. It kinda comes down to a mix at the end of the day. Right? When you have a higher mix of the AI portfolio, you might see a lower rate. But, again, I kinda emphasize q one, we saw operating margins growing 36%.

And if you take a look at the guide for q two, you have revenue sequentially growing $5,000,000,000, but operating margin growing $500,000,000. Right? So there’s clearly, you know, you know, margin accretion, you know, when it comes to the AI portfolio, but we’re also expanding margins in traditional server and and storage. On the volume piece, like, we guided at the beginning of the year in, you know, 15 plus on AI with 2,000,000,000 of shipments and 14,000,000,000 backlog. I think it’s safe to say that we’re on the plus side of the 15,000,000,000, and a lot of people say, well, hey.

Why did you just call a new number? And and the reality is it’s really hard to do because, you know, these are very technical engagements that we have with customers. Right? Because a lot of this revenue is being generated by these large tier two CSPs. And so I think a little bit of color on how the relationship works kinda help you guys understand sort of the spikiness in the business.

When we engage with these customers, you know, they’re spending a lot of money, and they have very specific outcomes that they’re looking for. And so when we engage with them, we will do anywhere from three to five designs for them, and these designs will be very different from each other. Right? And then the customer will have to and and we go back and forth for quite a while to hone in on the designs on each of these designs. The customer will then wait until the very last minute to make a decision to say, hey.

I’m ready to make a decision where I’m spending billions of dollars of CapEx that I need to know that I’m making exactly the right decision on exactly the right technology. And that’s been a key differentiator for us in addition to the ecosystem, in addition to our services, in addition to our captive finance with Dell Financial Services. It’s this technology back and forth that it makes it hard to predict when is the order going to land, and therefore, when what’s the delivery schedule gonna look like, then when is it gonna materialize into the p and l. But I think as we go through our second fiscal quarter, you know, we’ll learn a lot more about the deals that we’re working on and have a better look at what the second half looks like from an AI perspective. But, again, clearly, we’re on the plus side.

We recognize it. We also understand the frustration around, hey. If you know a number, call it and say, look. And we have a number, but it’s it’s really gonna depend on customer choice and, you know, technology decisions that they make. And, you know, when we put a number out there, we we wanna make sure that we’re gonna hit it.

Right? So that’s that’s why we stick to the 15 plus for now.

Wamsi Mohan, Bank of America Analyst, Bank of America: Yeah, and I know it was called out on the call that the plus was a capital P L U S.

Arthur Lewis, President of Infrastructure Solutions Group, Dell: All right. Underscore bolded, italicized, yeah.

Wamsi Mohan, Bank of America Analyst, Bank of America: Yes, so, all right, well, maybe just to think through product transition because you noted one point, which is you’re doing so many different designs and it’s kind of quite complicated. You got to get all these components, supply chain, And you guys have been terrific at managing supply chain. Maybe if you could just spend thirty seconds talking about how you’ve handled product transitions in some way, right? Like you just, I think the industry has actually struggled a lot going from hopper to black. Well, you guys were super early in delivering that as you’re looking from now maybe GB 200 to 300.

How do you think about the cadence of this? It feels like maybe this transition should be easier, but would love to get your high level thoughts on that.

Arthur Lewis, President of Infrastructure Solutions Group, Dell: Well, look, I don’t I don’t really wanna jinx myself, but when you’re engaged at a very technical level with customers and you get an indication of what it is they’re gonna buy, you have an indication of what you need to buy. When you’re kinda speculating as to what might happen, you might get yourself, you know, kinda like in a sideways, you know, sort of type Sure. Of it. But this is again, you know, the the pace of technology here is, like you know, I’ve been in the industry for a little bit over thirty years. I I’ve never seen anything like this, Wamsi.

And you got super chips coming out now every six months. Right? And you got the software that goes along with it. The networking advancements, you’ve gone from 200 to 400 to 800 to 1.6, you know, soon to 3.2. I mean, the amount of innovation here is is just staggering.

And then, you know, we talked about NVL 72 has got 1,200,000 parts. I kinda was joking with Paul envisioning, like, hey. Why why don’t we just lay out all the parts on the floor? And, like, be like, who wants to judge the who wants to, you know, come and partake in putting this puzzle together? Right?

I mean, these are not easy things to engineer. You know, people who think that there’s reference design out there that you can just go copy and get a bunch of people and kinda put it together, that’s a fallacy. Like, putting these systems together is extremely complicated. You know, deploying them, connecting them, getting them up and running, turning them over into production, it’s very complicated. We’ve differentiated ourselves.

We were the first to deploy Hopper. We deployed a hundred thousand GPUs in six weeks last year. I haven’t heard of anybody being able to do that. We deployed the first NVL 72 in November. You know, a lot of our competitors are still having trouble deploying NVL 72.

And, you know, we’re now in a position where we turn over systems to customer and production within twenty four hours. Right? So we just keep getting better and better as we hone our skills, and customers need it because the pace of techno I mean, typically, you’re on, like, a sort of a TikTok, you know, like a major thing every two years, a midlife kicker, you know, in between. You got major transitions happening now every, you know, six months. Right?

You’re going from you know, last year, we were at 62, you know, GPUs per rack. Now we’re at 256 heading to 576. Right? It’s just, like, within twelve months apart. Right?

It’s it’s.

Wamsi Mohan, Bank of America Analyst, Bank of America: Yeah, the base of product introduction. I tuned in into DTL. Yeah, so

Arthur Lewis, President of Infrastructure Solutions Group, Dell: remember Jeff, he has a new acronym, UFP?

Wamsi Mohan, Bank of America Analyst, Bank of America: Yes. Yeah, that’s what this is. Yes, yes.

Arthur Lewis, President of Infrastructure Solutions Group, Dell: I’m quite capable with that. Yeah.

Wamsi Mohan, Bank of America Analyst, Bank of America: Yes, it’s quite amazing. Maybe a little bit on Dell’s differentiation here and handling the supply chain. We heard from one of your peers and they had a material guide down to their numbers because of issues associated with tariffs. How do you guys navigate? I know you absorbed some of the impact.

I know you called out on the call and said like we’re not making any price changes at the moment. How are you able to do that? Like, what is the secret sauce here that you are able to deliver such solid results on managing the supply chain?

Arthur Lewis, President of Infrastructure Solutions Group, Dell: Look, I mean, kinda like a four part unsatisfactory sort of answer. Right? Number one, I mean, Dell has been managing geopolitical issues for the last forty years. Right? And there have been any number of issues, you know, that we’ve shown, you know, a certain, you know, agility and, you know, adaptability around.

Specifically on tariffs, we’ve been working in a situation since Trump v one, you know, in 02/2016. You know, we’ve become really good at it. We’ve become really agile about it, and everything that we know about tariffs is embedded in our guide. I know it surprises a lot of people that, you know, everything that we know about tariffs embedded in our guide, and we talk about q two being deflationary, but that’s just kinda like what we do. Yeah.

Wamsi Mohan, Bank of America Analyst, Bank of America: No. It’s it’s actually really impressive, especially when you consider how other companies are operating. And And I know ever since Michael started the company, supply chain and negative cash conversion cycle, these have been hallmarks for you guys. So pretty amazing. Well, maybe back to AI servers a little bit.

So you guys, you just noted Arta that 5,000,000,000 incremental on revenues. You’ve got about half a billion incremental sequentially on gross profit dollars, half a billion sequentially on operating profit dollars. So maybe just help us think through how that flow through is as high as it is on on the one hand and what other components are contributing towards that sequential increase outside of AI servers.

Arthur Lewis, President of Infrastructure Solutions Group, Dell: Well, I’m gonna include AI servers just to kind of tell you the full story, but I think there’s four components to think about. Right? One is, you know, storage is incredibly important in the p and l, and we continue to push more Dell IP. And and that’s incredibly important because, you know, we talk about the fact that we wanna push more Dell IP because, obviously, we make more money on it. But I think the why is, you know, incredibly important here.

And, you know, the reason is there’s been a significant trend over the last couple of years back to disaggregated infrastructure. And you start thinking about, well, why is the world moving back to disaggregated infrastructure? And the reason basically comes down to the fact that more and more customers are moving into what we refer to as a multi hypervisor environment. And what so why are customers doing that? They’re doing that, number one, because they wanna prevent vendor lock in.

Right? And so they wanna have flexibility in terms of the cloud operating system that they use. More practically, though, they’re also looking at the new workloads that are coming online, some of it due to AI, that are more container and bare metal based. Right? So they need to be thinking about that.

But, also, there’s been an industry shift over the last two years away from perpetual licensing and to subscription based pricing, subscription based pricing. And that subscription based pricing is based on CPU cores. Right? So in a traditional HCI, your cluster might run at 30 to 40 CPU utilization. Right?

That’s completely ineffective in a situation where you’re paying per core. Right? So you need the ability to scale compute and storage independently so more and more customers are now pushing back towards disaggregated as the way to go. It gives them more flexibility, it’s a lot more efficient from a cost perspective. And you see that in PowerStore.

We just talked about the numbers there, and you see that in the private cloud and Dell automation platform announcements that we had at Dell Technologies World. So we leveraged this technology trend. We have the data trend for the unstructured portfolio, the security trend for the cyber resilience portfolio. We talked about the fact that PowerProtect grew triple digits. So we like that storage trajectory, and we expand margins as a result.

So big contributor there, number one, is storage. On this traditional server portfolio, we continue to maintain very strong price discipline even with the mix where we have, which is probably more indexed to the enterprise than the the market itself, but we have industry leading margins there. And in our guide, you see that we have margins expanding there. We even have margins expanding as we go out throughout the year in in AI, and we couple those three business objectives with very strong cost controls from an OpEx perspective, and that’s how you get to your $500,000,000 of incremental op inc.

Wamsi Mohan, Bank of America Analyst, Bank of America: Okay. That’s helpful. Would you call out anything that was one time in nature at all in the quarter? Okay. That’s great.

So as you look at sort of the pipeline of opportunity here for AI and think about the customers, different customers, where that opportunity resides, how would you characterize this between maybe tier two CSPs, enterprise and sovereign and line of sight into that?

Arthur Lewis, President of Infrastructure Solutions Group, Dell: Yeah, So, you know, from a market segment perspective, we basically look at it three separate, you know, customer segments. And maybe a little bit more when get the enterprise, but I’ll get there in a second. Right? The one that we talk a lot about is, you know, sort of the tier two CSPs. Right?

And they’re and they’re the dominant, you know, portion of the portfolio right now, and there’s kind of two flavors of these CSPs. Right? You got a couple of companies out there that, you know, are looking to change the world, and, you know, they’re driving to artificial general intelligence or artificial super intelligence. Right? And you got the rest of the neo clouds that are really out there buying for the GPU as a service business.

And that is, you know, the lion’s share of the revenue and is the lion’s share of the pipeline. Right? Because there’s an unabated race to a pot of gold at the of the rainbow that these guys are chasing. The second customer set is sovereign. We’ve talked a lot about sovereign.

We talked now that, hey. This is an area that’s starting to ripen, so you’re starting to see sovereigns materialize in the pipeline. A lot of people talk about, you know, the announcements in The Middle East, and, yeah, those are interesting.

Wamsi Mohan, Bank of America Analyst, Bank of America: When are booking a flight there?

Arthur Lewis, President of Infrastructure Solutions Group, Dell: I was there earlier this year. Okay. You know, a lot of people talk about The Middle East, but, you know, there’s sovereign opportunities all over the world in The United States, UK, France, Germany, in Northern Europe, in Asia, Japan, Malaysia, Singapore, Korea. There are sovereign opportunities all over the place. And, you know, last Thursday, we announced one with the Department of Energy in building out their new flagship Nurse 10, which was, you know, an incredible win because, you know, traditionally, we haven’t paid a lot of attention to the h p c HPC space.

But now, very interestingly, HPC is moving towards AI as you get, you know, model and simulation to go along with the traditional, you know, machine learning, deep learning, and generative nature of artificial intelligence, which is placed naturally to our strength. And so that was a a pretty nice, you know, win there. You know, Jensen was there with the com with the key commerce department of energy secretary, Chris Wright. So that was incredibly proud moment for us in in in winning that business. And so you’ll see more of those opportunities, right, then get into the pipeline and, you know, start to book orders.

And then, you know, there’s the enterprise where we talked about the fact that we now have 3,000 customers. And, you know, what I really like about the enterprise is they it continues to grow, but the maturity level is still very nascent compared to the other two segments. Right? And the other you know, the CSP, the ballgame is underway. Right?

And and it’s early innings. The sovereign, it’s probably the, you know, top of the first inning. But in the enterprise, the game hasn’t even started. Right? Players are still warming up on the pitch.

Yeah. You were pulling into the parking lot, and and and we’re we’re getting ready for the game. But what I really like about the enterprise and what’s really exciting is that, you know, we are now helping customers define their future data strategy. This is not something that we have traditionally done as an infrastructure provider. Companies really don’t understand artificial intelligence, how to deploy it, how to use it, let alone how it’s going to impact their data center, you know, going forward.

So we sit down with customers at a very early stage, and we talk about very strategic things like what use case and ROI are you going after? Do you think about model selection? Jeez. I got this llama thing. I got this cohere thing.

I got this Mistral thing. I got this Gemini thing. How how do I match up, you know, model against use cases? Then they get to the really hard question around, okay. I understand my use case or a couple of use cases.

I understand my model strategy. But now my data is tied to, like, hundreds of applications against thousands of databases. These databases are very siloed. They don’t talk to each other. The data is not clean.

It’s not been prepped. It’s not tagged. There’s no easy way for me to ingest it into the AI. How do I how do I do all of this, Dell? Because if data is the fuel that feeds AI, right, and you’re building a 400 horsepower engine, but you’re gonna feed it nonpremium grade fuel, right, you’re you’re not gonna get, you know, the the optimization and the value out of the out of the engine itself.

So we are now, you know, at a very strategic position with a lot of these customers where we’re helping them not just define their current architecture, but the architecture, their infrastructure for their future data center. And that’s that’s a position that we haven’t been in, and, you know, I love the fact that we’re leading with innovation here. You know, we’re not fast following anybody. Right? If you take a look at our compute portfolio, our storage portfolio from private cloud to the AI data platform to the cyber resilience, I mean, we’re innovating like it’s nobody’s business.

You know, DTW last week was an incredibly proud moment. You know, I had the privilege of speaking to, you know, the innovation that the team is driving 40 major, you know, product announcements, you know, across everything. And, you know, the biggest question, I say, you didn’t talk about this. You didn’t talk about that. I’m like, I have, you know, fifteen minutes back.

How much stuff do you want me to talk about? But that’s how much innovation we’re driving. And so, like, we we’re in the driver’s seat. We’ll not we’re we’re right front row into one of the biggest, you know, technology transitions of humankind, and it’s just incredibly exciting.

Wamsi Mohan, Bank of America Analyst, Bank of America: Arjun, just on on I think you when you started talking about enterprise, you mentioned ROI and it’s important. So can you give maybe just some examples that can help us think through, you know, where these efforts are being deployed at enterprises and what kind of ROI targets like and timeframe on those? Any perspective that you could share on that?

Arthur Lewis, President of Infrastructure Solutions Group, Dell: Yeah, so let’s go through a couple. So content is always an interesting one because artificial generative AI in particular is very good at document, you know, summarization. Right? So, you know, if if you, like us, you know, have, like, thousands of people that are generating tens of thousands of pieces of content, there’s a very clear ROI to say, hey. You can build a content generation engine and really help streamline and accelerate and drive consistency and perfection in your content creation.

So that’s been a pretty easy to understand, yeah, use case for a lot of customers. A coding assistant has been another really good use case. I mean, we’re using that internally. And, you know, we’ve targeted, I think, conservatively 30% productivity gains using coding assistance. And then I got a choice to make.

I can go deliver 30% more stuff or deliver the same stuff with 30% less OpEx. Now now it’s a choice. Do I wanna be more of an innovator, or, like, how do I, you know, kinda think about the business? But, again, that’s a conservative number. You know, customer service has been a great one because you you at Dell, we’ve been driving what we call the next best action, which we use generative AI to help the call center reps understand what the problem is that the customer has to get to an action that’s going to get the situation resolved significantly faster than sort of in the old world.

And then, obviously, your sales chat assistant would be sort of the top four use cases. And then there are other use cases around supply chain, finance, things like digital twin. So any number of use cases, but the content creation, code assistant, sales chat, customer service, I think are the top four that customers are playing around with right now.

Wamsi Mohan, Bank of America Analyst, Bank of America: Okay. That’s that’s super helpful. One of the things that since you have, like, such a large portfolio, you know, can you can you share some color around just storage attach in AI? I know you’ve spoken about Project Lightning, like where do you see deployments of that on a go forward basis? And how should people generally think about the attach of storage and other services when it comes to the ramp of AI servers?

Arthur Lewis, President of Infrastructure Solutions Group, Dell: Yeah. So we we already see, you know, the attach of network and storage to the compute. Right? Because, you know, the AI yeah. I would think of it as a system, you know, more than anything else.

Right? So, you know, last year, you know, artificial intelligence was a place where you had these one shot inferencing models. And with these one shot inferencing models, the model could sit on the HBM, and so customers were really focused more on the server node itself. But as you move now to tree of thought logic and some of these long thinking reasoning models, right, there the the model still sits on the HBM, but it’s not gonna have all of the information to respond to all the queries. Right?

So it needs to go to the fetch information from the network attached storage. Right? So now you need, like, very quick connection. You need fast scalable storage. It’s got a very quick connection to the compute to be able to generate the tokens to solve, you know, the problems for AI.

Right? And so, you know, as enterprises move and adopt more of these reasoning and long thinking models, it’s not just a compute game anymore. It’s a compute plus the network plus the storage. Right? And our, you know, value proposition, I think, is very strong here because in this system, we are unique in that we are the only entity in the world that can actually engineer, optimize, and fine tune the compute, the network, and the storage under one roof.

Essentially, we become the integrator of the system versus the customer saying, well, I’m gonna buy the compute from vendor a, then a network from vendor b, the storage from vendor c. Now I gotta put this puzzle together and make it work. Right? And we’ve not only put the infrastructure together, but we’re building on very salient components. We talked about the parallel file system, right, which will be the fastest parallel file system in the world.

You know, we believe it’ll be twice as fast as our nearest competitor, allowing for 64% greater data access, which is really what you want in a parallel file system. So for customers that have the very high performing file in that tier zero space, Lightning is gonna be perfect for them. We also talked about the partnership with NVIDIA and Dynamo in creating this key value caching layer so that when you kinda have to go back and fetch from your network attached storage, you can do do so at very accelerated speeds because, you know, these long thinking models, and this was kinda like the deep sea conversation we’re having before, like, it was really more about the reasoning model because the compute needed to respond to a reasoning model is about a hundred times more than in this one shot inferencing models. In fact, Jensen said in earnings last week, it’s a thousand times more. I haven’t seen that math, but I know it’s at least a hundred times more.

But if he’s saying a thousand, then we’ll maybe we’ll go with his number a thousand times more. And then and then you have the underlying PowerScale, PowerStore. Right? So it’s the breadth of the portfolio that’s coming together, whether it’s private cloud, whether it’s the unstructured portion of the portfolio, or the cyber resilience portion of the portfolio, we kinda got you covered from a from an enterprise perspective.

Wamsi Mohan, Bank of America Analyst, Bank of America: Okay. Can you talk about like, for let’s say if you sold servers for a hundred dollars, like how much of what percent or how many dollars of attach could you get on any additional parts of the portfolio? And should we think about the margin structure of that as well?

Arthur Lewis, President of Infrastructure Solutions Group, Dell: Yeah. I don’t know that I have a good kinda like, it’s too early to say, hey. Like, for every dollar of server revenue, you should get expect this. Not every dollar of server revenue is the same. Like, say, I’ll give you an example.

You know, I’m an enterprise customer. I might have a use case that requires, you know, an eight way server node. Right? Because that’s the performance I need. Well, that’s gonna cost one thing.

But it might be that I need a PCIe form factor that I’m gonna scale up over time. Right? That’s gonna cost something else. Both are gonna require the same storage, but they’re different costed compute nodes. Right?

So the the ratios will be off. Yeah. Right? So I’m still trying to figure out if there’s a good attach metric, but, you know, we’re still trying to kinda figure out what we wanna do is attach storage and network to every opportunity. Right?

That that’s the attach metric I’m looking for. Right? And then we can get into, am I attaching, you know, sort of the the right amount of storage to it? But like I said, we, you know, we see it today. Right?

Like, you know, where we are selling the compute, we have a really good opportunity to sell the storage and and we’re doing that. And the margin profile should be, like, within the profile of what we’re talking about when we sell Dell IP storage. Right? No, that’s great.

Wamsi Mohan, Bank of America Analyst, Bank of America: And those are very good margins for those who don’t know. But when you think about, as you have more and more of these, all such contracts and attach and services especially, some of that portion will get deferred over time. So one of the interesting things that’s happening I think is you have this dynamic on your deferreds where obviously you’re adding to the deferreds with all the AI servers, but there’s also an element deferred that’s coming off your balance sheet. So it’s not fully apparent to investors what’s going on. So maybe if you could help us think through when when does the materiality of that start to kick in from from your perspective?

Arthur Lewis, President of Infrastructure Solutions Group, Dell: I’m gonna defer to Paul on the materiality of it, but, like, this is a very nascent business. Right? We shipped a little bit close to $10,000,000,000 last year. We know we’re gonna ship over $15,000,000,000 this year. You know, when we book these deals, you know, there’s a percent of the services that we do that, you know, we follow generally accepted accounting principles, and we defer a portion of that consistent with the term of the contract.

That stuff moves off to the balance sheet, and then over time comes back to us. But it’s still very nascent, so I don’t think we’ve reached all the level of materiality, I would say, yet just given the newness of the business. But, you know, again, like, minimum, we’re gonna do $2,025,000,000,000 dollars sort of in the first two years. Right? That’s an incredibly fast ramping business.

So I can’t imagine we’re not gonna get to materiality, you know, quicker than norm.

Wamsi Mohan, Bank of America Analyst, Bank of America: Okay. Alright. That’s that’s really helpful. Maybe just I know we’ve we’ve got way little time left and we still have so many pieces of the business that we haven’t even touched on, but maybe just to very quickly touch on industry standard servers sort of the cycle replacement cycle dynamic that’s going on over there.

Arthur Lewis, President of Infrastructure Solutions Group, Dell: Yeah. Like I said, you know, we’ve had what six consecutive quarters of demand growth, five consecutive quarters of p and l growth. And, you know, a lot of that has been driven by, you know, this consolidation. There’s a clearly a a refresh that’s going on, but then there’s a huge opportunity to recite to consolidate and and refresh. And, you know, that’s that’s kinda like what we see for the year.

We we did see in you know, right around April 2, you know, demand slowed for two or three weeks. But, again, like, the world got turned upside down, you know, where, you know, we thought one thing on tariffs, and then the next day, it was like, wow. It could that’s something, you know, you know, completely different. And so I think a lot of companies were like, hey. What does this mean from a macro perspective?

What does this mean to my business? How should I be thinking about spend? So we definitely kinda saw a slowdown. And then internally, we brought down our our internal model forecast by about a point. So, you know, we were thinking the market was gonna grow five to seven.

We thought now it’s, like, you know, more in the four to five to be a little more conservative, but it’s still a growing market. And and that’s, you know, sort of factored into our guide. And, you know, what’s really cool is that, you know, we have a pretty big installed base, and 75% of that installed base is sitting on 14 generation and older servers. And we just launched our 17 generation server. So, I mean, depending the workload, you can consolidate, you know, say, you know, one server to four to seven servers, you know, kinda depending on the workload.

So that’s a pretty significant consolidation for enterprises that are looking to optimize for space and power.

Wamsi Mohan, Bank of America Analyst, Bank of America: Oh, that’s awesome. I know we’re out of time. So maybe Arto just to close out, what do you think investors should most be focused on about Dell and any parting thoughts from you?

Arthur Lewis, President of Infrastructure Solutions Group, Dell: Yeah. I think the most important like, what what excites me about, you know, what I do? And, you know, I love technology and and I love artificial intelligence. I think, you know, this is a technology that’s gonna revolutionize know, the world for the better. I think this is something that’s gonna drive human progress in so many ways that, you know, we can’t envision.

And we have a front row seat to helping customers navigate this very challenging, you know, transition. We’re helping the largest of the CSPs. We’re helping sovereigns. We’re helping the enterprise. We’re taking all of the learnings across all the different customer segments and sharing those learnings.

Everything that we do in the largest of the CSPs, you know, we take that and we help, you know, customers of all sizes and shapes kinda, like, really understand the technology. And, you know, being being there and being that trusted adviser for the enterprise through this technology transition and leading the way, not being a fast follower, I I think is something that we don’t get enough credit for.

Wamsi Mohan, Bank of America Analyst, Bank of America: Awesome. Well, thank you so much, Arthur. That was really insightful. Really appreciate your time. Thanks, Thank you.

Arthur Lewis, President of Infrastructure Solutions Group, Dell: Thanks, guys.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.