Michael Dell, who revolutionized the personal computer industry with Dell Technologies in the late ‘90s and is now the 10th richest person in the world, offered his take on the AI wave his company is helping enable, and why he thinks the data center building peak is not yet here.
Dell Technologies’ stock has skyrocketed 32% in the past year alone thanks to the increasing importance of the infrastructure services it provides to customers like OpenAI. While some analysts and tech leaders have claimed the AI industry is in a bubble, Dell said the boom is still going strong because of AI companies’ insatiable appetite for computing power.
If customers were buying without a real need, Dell would be worried, but “we don’t see that at all,” he told CNBC. “In fact, we see kind of the opposite.”
Dell said when it comes to AI, the company’s customers are facing so much demand of their own they are running up against the limits of America’s aging power grid.
“Our customers are immediately deploying whatever infrastructure they get,” he said. “The limiting factor for many of them seems to be, can they get the power into the buildings to supply the energy required.”
The company’s server-networking business grew 58% last year, Dell said. And over the next four years, the company’s annual revenue growth will exceed expectations at an estimated 7% to 9% growth clip, compared with the 3% to 4% it previously forecasted. Its headline annual earnings per share (EPS) growth—a measure of how much a company makes per share outstanding—will be 15% or better, compared with the 8% previously forecast, the company said Tuesday.
The AI stock-market bonanza
As a whole, the AI industry is leading a stock-market bonanza that has lifted companies supplying the infrastructure for AI. Oracle’s shares jumped by about 36% in one day after the company announced a five-year, $300 billion cloud deal with OpenAI last month. And this week, AMD shares skyrocketed 24% after it said it would partner with OpenAI on AI data centers. Dell Technologies’ own stock is up 39% year to date.
To be sure, many market onlookers are starting to sound alarms about the frothiness of the market. On Wednesday, the Bank of England’s Financial Policy Committee cautioned “equity valuations appear stretched,” and warned that in part owing to the record concentration in the stock market, stocks could be at risk if the impact of AI falls short.
Yet, all told, Dell sees the massive demand for AI and the infrastructure powering it as a sign the good times are still here, at least for now.
“I’m sure at some point there’ll be too many of these things built, but we don’t see any signs of that,” Dell said.