Dell expands AI infrastructure to streamline enterprise adoption

Published 19/11/2024, 01:06 am
DELL
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ATLANTA - Dell Technologies (NYSE: NYSE:DELL) is enhancing its AI offerings with the introduction of new servers and services aimed at simplifying AI adoption for enterprises. The company announced updates to its AI infrastructure, including the Dell PowerEdge XE servers and Dell Data Lakehouse, as well as a suite of professional services.

The Dell PowerEdge XE9685L, a liquid-cooled server, and the air-cooled Dell PowerEdge XE7740 are designed to handle AI, machine learning, and high-performance computing workloads efficiently. These servers are part of the Dell Integrated Rack 5000 (IR5000), which is engineered for high-density applications without compromising energy efficiency.

The Dell PowerEdge XE9685L features dual 5th Gen AMD (NASDAQ:AMD) EPYC CPUs and can accommodate up to 96 NVIDIA (NASDAQ:NVDA) GPUs per rack, while the Dell PowerEdge XE7740 uses dual Intel (NASDAQ:INTC) Xeon 6 CPUs with options for various accelerators. Additionally, Dell plans to support the NVIDIA GB200 Grace Blackwell NVL4 Superchip with a new server that can support up to 144 GPUs in a 50OU standard rack.

Dell's Data Lakehouse is receiving updates to include Apache (NASDAQ:APA) Spark for distributed data processing, enabling enterprises to manage and analyze data more efficiently for AI tasks. This enhancement aims to provide faster insights by unifying data analytics and management processes.

To assist organizations in adopting AI, Dell is collaborating with partners like NVIDIA to offer solutions that accelerate AI operations. The Dell AI Factory with NVIDIA is intended to deliver improved performance and reduce the time-to-outcomes for AI deployments.

Dell also offers Professional Services to help organizations reach their AI goals more quickly. These services include advisory and implementation for sustainable data centers, data management services to organize and refine data, and design services for AI networking to optimize workloads.

The new Dell PowerEdge XE servers are expected to be available globally starting Q1 CY2025 for the XE9685L and Q2 CY2025 for the XE7740. Updates to the Dell Data Lakehouse and Dell Validated Designs for AI PCs are available now, with additional services and solutions rolling out through CY2024 and into CY2025.

This expansion of Dell's AI infrastructure and services underscores the company's commitment to facilitating enterprise AI adoption and is based on a press release statement.

In other recent news, Dell Technologies has been making significant strides in its financial performance and strategic initiatives. The company issued $1.5 billion in senior notes, with $700 million of 4.350% notes due in 2030 and $800 million of 4.850% notes due in 2035, as a part of its strategy to manage its debt profile effectively.

In terms of product development, Dell has unveiled new AI-focused products and services, including the Dell Integrated Rack 7000, PowerEdge XE9712 in collaboration with NVIDIA, and the PowerEdge M7725 server powered by 5th Gen AMD EPYC CPUs. Additionally, the company has expanded its AI offerings with new AMD-powered servers, aiming to simplify and accelerate enterprise AI adoption.

Analysts from Citi and Evercore ISI have maintained a positive outlook on Dell, with Citi maintaining a Buy rating and a $160.00 price target, and Evercore ISI reiterating an Outperform rating with a $140.00 price target. However, Susquehanna issued a Neutral rating, expressing concerns about the uncertain economic returns of AI hardware.

The company's financial outlook does not currently include the expected ramp-up of AI server revenue, suggesting there could be additional upside to the AI server revenue targets. Dell's focus is not solely on revenue growth but also on expanding sustainable EBIT margins throughout fiscal year 2025. These are some of the recent developments at Dell Technologies.

InvestingPro Insights

Dell Technologies' recent announcement of enhanced AI offerings aligns well with its strong market position and financial performance. According to InvestingPro data, Dell boasts a substantial market capitalization of $92.41 billion, reflecting investor confidence in its strategic direction.

The company's focus on AI infrastructure and services could potentially boost its already impressive revenue, which stands at $91.84 billion for the last twelve months. This move into high-growth AI markets may help offset the slight revenue decline of 1.9% observed in the same period.

InvestingPro Tips highlight Dell's financial strength and shareholder-friendly policies. The company has been aggressively buying back shares and has raised its dividend for three consecutive years, demonstrating a commitment to returning value to shareholders. This is further evidenced by the high shareholder yield and a dividend yield of 1.35%.

Dell's P/E ratio of 23.58 and adjusted forward P/E of 20.49 suggest that the stock is reasonably valued, especially considering its potential for growth in the AI sector. The PEG ratio of 0.21 indicates that the stock may be undervalued relative to its expected earnings growth, which could be positively impacted by the new AI initiatives.

The company's profitability is solid, with a gross profit of $20.7 billion and an operating income of $5.895 billion in the last twelve months. While Dell suffers from weak gross profit margins, its expansion into high-value AI solutions could potentially improve this metric over time.

Investors should note that Dell has shown strong returns, with a 74.74% year-to-date price total return and an impressive 81.63% return over the past year. This performance suggests that the market is optimistic about Dell's strategic moves, including its push into AI technologies.

For those interested in a deeper analysis, InvestingPro offers 12 additional tips on Dell, providing a comprehensive view of the company's financial health and market position.

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

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