Thinglass
In a previous analysis of Hewlett Packard Enterprise Firm (HPE) vs HP Inc. (HPQ), we emphasised Dell Applied sciences Inc.’s (NYSE:DELL) strategic transfer to consolidate its PC and server companies by way of the acquisition of EMC in 2016. Notably, Dell emerged as a pacesetter in each the server and storage distributors market and stands because the third-largest PC maker globally. Nevertheless, regardless of its numerous portfolio, Dell skilled a 14.3% decline in income development in 2023 in comparison with the earlier yr. Throughout its newest earnings briefing from February twenty ninth, administration attributed this decline to market weaknesses within the PC and server segments, though highlighted that there was a notable restoration in all segments throughout the latter half of 2023. Moreover, the corporate emphasised the importance of AI servers, AI storage, and AI PCs as key drivers for future development. Consequently, we delved into the expansion prospects of every of Dell’s segments, analyzing the impression of AI on every market and evaluating Dell’s competitiveness in opposition to its rivals, leading to our Purchase score.
Income Breakdown by Section ($ mln) |
2019 |
2020 |
2021 |
2022 |
2023 |
5-Yr Common |
Servers and networking |
17,127 |
16,497 |
17,901 |
20,398 |
17,624 |
|
Development (%) |
-14.2% |
-3.7% |
8.5% |
13.9% |
-13.6% |
-1.8% |
Storage |
16,842 |
16,091 |
16,465 |
17,958 |
16,261 |
|
Development (%) |
0.4% |
-4.5% |
2.3% |
9.1% |
-9.4% |
-0.4% |
Whole Shopper Options Group |
45,838 |
48,355 |
61,464 |
58,213 |
48,916 |
|
Development (%) |
6.1% |
5.5% |
27.1% |
-5.3% |
-16.0% |
3.5% |
Whole |
79,807 |
80,943 |
95,830 |
96,569 |
82,801 |
|
Development (%) |
-0.1% |
1.4% |
18.4% |
0.8% |
-14.3% |
6.9% |
Supply: Firm Knowledge, Khaveen Investments
Servers and Networking Section
Concerning the Merchandise
Dell’s Servers portfolio contains “high-performance general-purpose and AI-optimized servers able to run workloads across customers’ IT environments, on-premises and in multicloud and edge environments“, resembling AI mannequin coaching, fine-tuning, and inferencing. However, its Networking portfolio contains Ethernet switches and Edge Networking infrastructure designed to handle the wants of contemporary workloads throughout the sting, core, and cloud environments.
From the chart above, Dell’s market share fluctuated and declined barely by 2% from 2016 (17.6%) to 2021 (15.6%), whereas HPE’s market share skilled a powerful decline of 9.9% from 25.6% to fifteen.7% over the identical interval. Moreover, Inspur elevated its market share by 3.3% to 9.4%, whereas Worldwide Enterprise Machines Company’s (IBM) share declined considerably over time. We additionally examined the variety of server merchandise, and HPE has the best quantity with 52 merchandise, adopted by Dell and Inspur with 47 merchandise. We imagine regardless of having fewer server merchandise than HPE, Dell is positioned as a well-established server vendor with a steady market share in a aggressive market.
Comparability |
Dell |
HPE |
Inspur |
Lenovo Group Restricted (OTCPK:LNVGY) |
IBM |
Variety of Servers Product |
Supply: Firm Knowledge, Khaveen Investments
Moreover, we look at how Dell may preserve or enhance its place within the server market with its AI-powered servers, one of many principal section development drivers as highlighted by administration within the newest earnings call.
How AI Enhances Servers
In our previous analysis of Superior Micro Units, Inc. (AMD), we highlighted how AI helps optimize information middle operations resembling lowering power consumption, bettering reliability, and optimizing servers. Nevertheless, we additionally took be aware that AI depends on a mix of merchandise and techniques, notably GPUs and CPUs, to realize its full potential as a result of excessive computational calls for of enormous language fashions. GPUs excel in accelerating the coaching of deep neural networks by way of parallel computations, whereas CPUs deal with varied AI duties together with information preprocessing, mannequin coaching, and fewer computationally intensive algorithms like rule-based techniques or choice bushes.
We referred to MLPerf Inference Score, which is a benchmark suite that measures system efficiency in processing inputs and producing outcomes with pre-trained fashions throughout varied situations. As well as, we look at three totally different metrics, to match the efficiency of Dell and its rivals’ merchandise:
- BERT: “A language representation model by Google. It uses two steps, pre-training and fine-tuning, to create state-of-the-art models for a wide range of tasks“.
- RetinaNet: “A one-stage object detection model that utilizes a focal loss function to address class imbalance during training“.
- ResNet: “A deep learning model used for computer vision applications“.
Moreover, we examined the leads to each Server and Offline Modes to evaluate the System Beneath Take a look at’s capabilities beneath dynamic and glued question workloads, respectively. We used the rating of Cisco’s server as a base of 1.0 as Cisco Methods, Inc. (CSCO) has the bottom rating, and we adjusted different corporations’ scores accordingly.
ML Commons, Khaveen Investments
From the chart, Dell and HPE’s servers outperformed in comparison with different rivals. Each corporations’ scores throughout all metrics had been consistent with one another, with solely minor variations starting from 0.0 to 0.4. Oracle Company’s (ORCL) servers additionally showcased a commendable efficiency, although barely decrease than Dell and HPE. We attributed the excessive scores of Dell, HPE, and Oracle to the utilization of 8 NVIDIA Company (NVDA) H100 accelerators, which considerably enhanced their capabilities. Fujitsu Restricted’s (OTCPK:FJTSF) servers, though benefitting from the H100 accelerators, achieved a decrease rating as a result of deployment of fewer accelerators (4 as a substitute of 8). Equally, we recognized that the low rating of Cisco’s servers could also be attributed to the absence of any accelerator utilization.
Comparability |
Course of Core |
ResNet |
Retinanet |
BERT |
Issue Rating |
||||
Servers |
Server |
Offline |
Server |
Offline |
Server |
Offline |
Rating |
||
Dell PowerEdge XE9680 |
2 |
1 |
1 |
2 |
2 |
2 |
2 |
1.7 |
1.36 |
HPE Cray XD670 |
4 |
2 |
1 |
1 |
1 |
1 |
1 |
1.6 |
1.39 |
Lenovo SE455 |
6 |
5 |
5 |
4 |
4 |
NA |
NA |
4.8 |
0.74 |
Oracle BM.GPU.H100.8 |
2 |
3 |
3 |
3 |
3 |
3 |
3 |
2.9 |
1.13 |
Fujitsu GX2560M7 |
4 |
4 |
4 |
4.0 |
0.90 |
||||
Cisco C240M7-EMR |
1 |
6 |
6 |
6 |
6 |
6 |
6 |
5.3 |
0.64 |
Common |
3.2 |
3.5 |
3.3 |
3.2 |
3.2 |
3.0 |
3.0 |
3.2 |
Supply, Khaveen Investments
From the outcomes, we compiled a rating desk based mostly on every server’s course of core and scores from pre-trained fashions. The variety of course of cores is an element for server efficiency, as extra course of cores may allow the servers to deal with extra duties concurrently, and Cisco’s server used the perfect course of core in comparison with different corporations’ servers. Total, HPE servers have the best rating at 1.6, adopted by Dell at 1.7, and Lenovo and Cisco servers are ranked final. Lastly, we computed the issue rating utilizing every server’s common rating inside a spread of 0.5x to 1.5x. Dell’s rating is 1.36x, indicating that the corporate’s AI server has extra aggressive benefits in comparison with different rivals, although HPE’s AI server outperforms it barely at 1.39x.
Outlook
TrendForce, Gartner, DIGITIMES Analysis, Khaveen Investments
In keeping with TrendForce, regardless of a decline of 6% in world server shipments growth in 2023, AI server shipments exceeded expectations with 37.7% development in comparison with 2022. Furthermore, it’s forecasted to proceed rising with 38% development in 2024, whereas world servers’ forecast development stands at a mere 2.1%, additional indicating the sturdy demand for AI servers.
With Dell holding a market share of 15.6%, we estimated the corporate’s non-AI and AI server shipments for 2023. For Dell’s non-AI server cargo projection, we assumed zero competitiveness from the corporate and thus a constant market share of 15.6% from 2024 to 2027, forecasting based mostly available on the market’s non-AI server shipments. Relating to AI server shipments, we factored in our computed issue rating of 1.36 for Dell and multiplied it by the market’s projected 38% development in AI server shipments for 2024 to derive Dell’s anticipated AI server shipments development. Subsequently, we multiplied this end result by Dell’s AI server market share from the earlier yr to find out the corporate’s AI server unit shipments. We repeated this calculation for subsequent years and calculated Dell’s complete server unit cargo development based mostly on each AI and non-AI server shipments.
Total, we estimated Dell’s complete server unit cargo development in 2024 to be 3.2%, greater than the market development of two.1%. Equally, the corporate’s server cargo development within the following yr can also be greater than the market development, indicating the corporate’s competitiveness in AI servers.
Servers Cargo Forecast |
2023 |
2024F |
2025F |
2026F |
2027F |
Whole Server Shipments (mln) |
13.39 |
13.66 |
14.48 |
15.35 |
16.27 |
Development (%) |
-6.0% |
2.1% |
6.0% |
6.0% |
6.0% |
Dell’s AI Server Unit Shipments (mln) |
0.18 |
0.28 |
0.38 |
0.50 |
0.68 |
Dell’s Non-AI Server Unit Shipments (mln) |
1.90 |
1.88 |
1.94 |
2.00 |
2.04 |
Dell’s Whole Server Unit Shipments (mln) |
2.09 |
2.16 |
2.32 |
2.50 |
2.72 |
Development % |
3.2% |
7.4% |
7.9% |
8.6% |
|
Dell AI Server Market Share (%) |
15.6% |
17.1% |
18.4% |
19.7% |
21.1% |
Dell Non-AI Server Market Share (%) |
15.6% |
15.6% |
15.6% |
15.6% |
15.6% |
Dell Weighted Server Market Share (%) |
15.6% |
15.8% |
16.0% |
16.3% |
16.7% |
Supply: Firm Knowledge, IDC, Khaveen Investments
As a consequence of Dell’s competitiveness in AI servers as mentioned beforehand, we anticipate its AI server market share to extend considerably from 15.6% in 2023 to 21.1% in 2027. Consequently, we anticipate Dell’s weighted server market share would additionally enhance from 15.6% to 16.7% over the forecast interval, gaining share from different corporations.
Storage Section
Subsequent, we examined how AI may benefit Dell’s information storage enterprise.
Concerning the Merchandise
Dell’s storage portfolio contains:
- All-flash arrays storage: storage that incorporates solely flash reminiscence drives (much like USB drives or reminiscence playing cards) and is right for high-speed information entry (e.g. PowerStore)
- Scale-out file storage: storage that may expand its capability by including extra drives (HHD, SSD, NVMe, and many others.) to the prevailing storage array. (e.g. PowerScale)
- Object platforms storage: Storage structure that handles giant amounts of “unstructured data such as photos, videos, email, web pages, sensor data, and audio files“. (e.g. ECS)
- Software program-defined storage (“SDS”): a cloud storage for managing and provisioning virtualized information that’s unbiased of the underlying {hardware}, bettering effectivity and lowering prices. (e.g. PowerFlex, ObjectScale)
IDC, StorageNewsletter, Statista
In our previous analysis of HPE vs HPQ in late 2023, we highlighted Dell’s market share within the enterprise information storage market was triple in comparison with HPE. Furthermore, we anticipated the corporate to keep up its main place transferring ahead. To determine the explanation for the corporate’s management on this market, we compiled the overall variety of storage accessible from the main storage distributors. Dell’s variety of storage merchandise is the best among the many high 6 main storage corporations, additional indicating the corporate’s competitiveness within the storage market.
Comparability |
Dell |
HPE |
NetApp |
Huawei |
Hitachi |
IBM |
Variety of Storage Merchandise |
Supply: Firm Knowledge, Khaveen Investments
How Storage Merchandise Improve AI
Data storage is important for AI, supporting coaching, information storage, and inference duties. AI workloads contain coaching algorithms, usually in phases, with numerous information varieties. These workloads demand high-speed, scalable storage, usually flash-based, to deal with unstructured information effectively. As well as, in keeping with NVIDIA, AI storage ought to have excessive efficiency and scalability in each capability and efficiency to accommodate the rising calls for of AI workloads.
Dell’s PowerScale, a scale-out file storage, acquired enhancements to its storage techniques, leading to as much as a 200% enchancment in efficiency for streaming reads and writes, together with updates to its PowerScale OneFS software program to reinforce AI modeling capabilities.
PowerScale will provide a brand new good scale-out functionality to enhance single compute node efficiency for enhanced GPU utilization, resulting in quicker storage throughput for AI coaching, checkpointing and inferencing. – Dell
Moreover, in keeping with the company, “Dell PowerScale is expected to be the first Ethernet storage solution validated on NVIDIA DGX SuperPOD, which will give customers increased flexibility, speed and ease for AI storage”.
Evaluation
We compiled a desk of AI storage launched by the main storage distributors, excluding Huawei and Hitachi (4th and fifth largest gamers respectively) resulting from a scarcity of obtainable data and specs of AI storage. We in contrast the storage that gives the best scalability and capability and is particularly used for AI/ML or Excessive-Efficiency Computing (HPC) workloads:
- Dell PowerScale F900: “The F900 is best suited for… algorithmic trading, artificial intelligence, machine learning and HPC workloads”.
- HPE Alletra 4120: “specifically designed to run the broadest range of data storage-intensive workloads “.
- NetApp AFF A900: “Run artificial intelligence and machine learning applications with the lowest latency “.
- IBM Storage Scale System 3500: “A single storage platform for multiple applications and high-performance workloads “
- Pure Storage FlashBlade//S: “… the ideal data storage platform for AI…unstructured workloads and accelerates AI processes “.
We examined based mostly on three principal metrics together with system type issue, uncooked capability, and scalability. The system type issue refers back to the variety of rack units per storage, so the next variety of the issue permits for higher uncooked capability. As well as, uncooked capability and scalability are different vital components for AI information storage, as mentioned beforehand.
AI Storage Comparability |
System Type Issue |
Uncooked Capability per Cluster |
Scalability (Max no. of nodes per cluster) |
Dell PowerScale F900 |
2U |
As much as 186 PB (186,000 TB) |
252 nodes |
HPE Alletra (4120) |
2U |
As much as 96 PB (96,000 TB) |
200 nodes |
NetApp, Inc.’s (NTAP) NetApp AFF A900 |
4U-8U |
As much as 702.7 PB (702,700 TB) |
24 nodes |
IBM Storage Scale System 3500 |
2U |
As much as 633 YB (633 tln TB) |
1000 nodes |
Pure Storage FlashBlade//S |
5U |
As much as 1.92 PB (1,920 TB) |
10 nodes |
Supply: Firm Knowledge, Khaveen Investments
Relating to the system type issue, NetApp storage boasts the best variety of 4-8U, adopted by Pure Storage’s FlashBlade//S, whereas the remaining three storages all are available 2U sizes. For uncooked capability, IBM’s Storage Scale System 3500 edges out different rivals’ storage with a large capability of 633 YB per cluster (equal to 633 tln TBs). Dell’s PowerScale F900 leads because the second highest with a uncooked capability of as much as 186 PB (equal to 186,000 TB) per cluster, whereas Pure Storage’s FlashBlade//S has the bottom capability of just one,920 TB regardless of its bigger system type issue. Moreover, IBM storage stands out with the best variety of nodes per cluster (1000 nodes), enabling superior scalability in comparison with different storage options. Dell storage ranks second in node rely with 252 nodes, whereas Pure Storage lags with the bottom scalability. Subsequently, we imagine regardless that Dell’s storage lacks competitiveness in comparison with IBM and NetApp’s storage, it’s nonetheless higher than the storage of HPE and Pure Storage. The desk under reveals our rating and our derived issue rating for every storage.
AI Storage Comparability |
System Type Issue |
Uncooked Capability per Cluster |
Scalability (Max no. of nodes per cluster) |
Common |
Issue Rating |
Dell PowerScale F900 |
3 |
3 |
2 |
2.67 |
1.08 |
HPE Alletra (4120) |
3 |
4 |
3 |
3.33 |
0.92 |
NetApp AFF A900 |
1 |
2 |
4 |
2.33 |
1.17 |
IBM Storage Scale System3500 |
3 |
1 |
1 |
1.67 |
1.33 |
Pure Storage FlashBlade//S |
2 |
5 |
5 |
4.00 |
0.75 |
Supply: Khaveen Investments
Total, IBM’s AI Storage carried out the perfect with the best common rating of 1.67, adopted by NetApp’s AFF A900 storage (2.33). Regardless that Dell is the chief within the storage vendor market, its AI storage solely ranked third among the many main storage distributors with a mean rating of two.67. Nevertheless, it nonetheless has extra aggressive benefits in comparison with HPE and Pure Storage’s AI storage. We calculated Dell’s AI storage issue rating to be 1.08 and anticipated that it could outperform the market, aside from NetApp and IBM.
Outlook
The storage market is predicted to develop at a CAGR of 5.49%, pushed by “scalable and flexible storage solutions“. As well as, we imagine that the demand for AI information storage (with excessive capability and scalability) would additionally enhance to accommodate AI and HPC workloads. Factoring our calculated issue rating of 1.08 for Dell, we derived Dell’s storage CAGR to be 5.95%, reflecting the corporate’s competitiveness. We forecasted the corporate’s storage section from 2024 and past based mostly on the CAGR.
Income Projection by Section ($ mln) |
2023 |
2024F |
2025F |
2026F |
2027F |
Storage |
16,261 |
17,228 |
18,253 |
19,338 |
20,488 |
Development (%) |
-9.4% |
5.95% |
5.95% |
5.95% |
5.95% |
Supply: Firm Knowledge, Statista, Khaveen Investments
Shopper Options Group Section
Concerning the Merchandise
Dell’s CSG contains “notebooks, desktops, and workstations and branded peripherals that include displays, docking stations, keyboards, mice, and webcam and audio devices, as well as third-party software and peripherals.“
Based mostly available on the market share chart, the main PC makers have been gaining shares over the previous a long time, because the Others’ market share confirmed a declining pattern over the identical interval. In 2023, Lenovo and HP Inc.’s market share skilled a slight enhance (23.3% to 25.6% and 21.8% to 22% respectively). However, Dell, which ranks third general, has its market share decreased sequentially from 17.3% in Q1 to fifteen.8% in This autumn. We imagine the decline might be attributed to the poor demand from each the Business and Shopper segments, which resulted in a unfavourable 19.5% development in Dell’s PC shipments in 2023. Moreover, administration highlighted the elevated competitors QoQ in low-price PC manufacturers in its This autumn 2023 earnings name, which, we imagine, might be the explanation for Dell’s sluggish demand.
How AI Enhances PC Merchandise (“NPU”)
Regardless of the sturdy decline in PC shipments in 2023, administration confirmed optimistic concerning the chance from AI PCs with Dell’s newest introduction of business AI PCs.
Whereas PC demand restoration has pushed out, we stay bullish on the approaching PC refresh cycle and the longer-term impression of AI on the PC market. – Yvonne McGill, CFO
For a PC to have AI-enabled options, a particular chip is used, referred to as a Neural Processing Unit (“NPU”), which is “a dedicated processor or processing unit on a larger SoC designed specifically for accelerating neural network operations and AI tasks“. It’s extra environment friendly than GPUs for these duties resulting from its devoted focus and optimized structure. NPUs are built-in into bigger SoCs like Intel Core Extremely and the most recent AMD Ryzen sequence processors, or might be discrete models on motherboards for specialised operations.
In comparison with GPUs, NPUs provide higher effectivity for AI-related duties as a result of they extract devoted circuits from GPUs, permitting them to deal with AI workloads extra successfully and at decrease energy ranges. NPUs complement CPUs and GPUs by specializing in AI-driven duties, resembling background blurring in video calls or object detection in picture modifying, whereas the opposite processors deal with broader duties.
As well as, Intel Corporation (INTC) reported that its latest Intel Core Extremely processor, geared up with NPU, has demonstrated superior efficiency in comparison with one other processor missing an NPU, as depicted within the picture under.
AI PC Competitiveness
As AI PCs are a brand new market, we imagine that the corporate that has launched extra AI PCs would have a first-mover benefit and thus can have extra product breadth competitiveness than different PC makers. Subsequently, we compiled a desk of AI-capable PCs as % of the overall PCs from the highest 5 PC makers. We received the overall variety of PCs for every firm from its web site. For AI PCs, we sorted out the PCs that use processors with NPU built-in, together with the Intel Core Ultra Processors sequence and AMD Ryzen (AMD) (8000s sequence and 7000s sequence). To allow AI PC, the processor (with NPU) must reach 40 TOPS, and people processors are thought of the perfect accessible within the present market, with AMD at 39 TOPS and Intel at 34 TOPS.
AI PC |
Lenovo |
HP |
Dell |
Asus |
Acer |
Variety of AI PC |
80 |
31 |
23 |
14 |
6 |
Utilizing Intel Core Extremely Processor (Max 34 TOPS) |
48 |
21 |
21 |
4 |
3 |
Utilizing AMD Ryzen 8040s sequence (Max 39 TOPS) |
20 |
3 |
0 |
4 |
3 |
Utilizing AMD Ryzen 7040 sequence |
12 |
7 |
2 |
6 |
0 |
Whole PC |
223 |
215 |
84 |
59 |
59 |
% of AI-capable PC |
35.9% |
14.4% |
27.4% |
23.7% |
10.2% |
Rating |
1 |
4 |
2 |
3 |
5 |
Issue Rating |
1.5 |
0.75 |
1.25 |
1 |
0.5 |
Supply: Firm Knowledge, Khaveen Investments
We noticed that Lenovo, which has the most important proportion of market share, additionally has the most important variety of PCs in addition to AI PCs (35.9%). However, the second-largest PC maker HP Inc even has a decrease % of AI PCs (14.4%) than Dell (27.4%) and Asus (23.7%). Moreover, Acer has the bottom % of AI PCs in its product portfolio. Total, we imagine Dell, although lags Lenovo, nonetheless edges out different rivals when it comes to AI PC competitiveness. We indicated the rating for every firm and calculated our issue rating accordingly.
Outlook
Canalys forecasted that the AI PC market will develop at a CAGR of 67.1% from 2023-2027, reflecting sturdy demand for AI PCs. AI PCs’ market share is predicted to extend from 19% to 60% in 2027, driving the worldwide PC cargo market.
With Dell holding a market share of 15.8%, we estimated the corporate’s non-AI and AI PC shipments for 2023. We did the same projection to Dell’s server cargo development for the corporate’s PC cargo development in 2024 and past. For Dell’s non-AI PC cargo projection, we assumed zero competitiveness from the corporate and thus a constant market share of 15.8% from 2024 to 2027, forecasting based mostly available on the market’s non-AI PC shipments. Relating to AI PC shipments, we factored in our computed issue rating of 1.25 for Dell and multiplied it by the market’s projected development in AI PC shipments to derive Dell’s anticipated AI PC shipments development. Subsequently, we multiplied this end result by Dell’s AI PC market share from the earlier yr to find out the corporate’s AI PC unit shipments. We then calculated Dell’s complete PC unit cargo development based mostly on each AI and non-AI PC shipments.
Just like Dell’s server cargo development, we projected the corporate’s AI PC cargo development in 2024 and past, factoring in Dell’s issue rating of 1.25. We then multiplied it by the market’s AI cargo projected development and Dell’s AI PC market share from the earlier yr to calculate the corporate’s AI PC unit shipments. For Dell’s non-AI PC cargo projection, we assumed no aggressive benefit for the corporate, leading to a constant market share of 15.8% from 2024 to 2027, forecasted based mostly on non-AI PC shipments. Total, we estimated Dell’s complete PC unit cargo development in 2024 to be 14.2%, greater than the market development of 11.5%. Equally, the corporate’s PC cargo development within the following yr can also be greater than the market development, indicating the corporate’s competitiveness in AI PCs.
PCs Cargo Forecast |
2023 |
2024F |
2025F |
2026F |
2027F |
Whole PC Shipments (mln) |
262.86 |
292.97 |
329.38 |
336.15 |
341.45 |
Development (%) |
11.5% |
12.4% |
2.1% |
1.6% |
|
Dell’s AI PCs Unit Shipments (mln) |
4.15 |
9.96 |
24.76 |
39.05 |
46.37 |
Dell’s Non-AI PCs Unit Shipments (mln) |
37.38 |
37.49 |
32.79 |
24.96 |
21.58 |
Dell’s Whole PCs Unit Shipments (mln) |
41.53 |
47.45 |
57.54 |
64.01 |
67.95 |
Development % |
14.2% |
21.3% |
11.2% |
6.1% |
|
Dell AI PC Market Share (%) |
15.8% |
17.9% |
20.3% |
21.9% |
22.6% |
Dell Non-AI PC Market Share (%) |
15.8% |
15.8% |
15.8% |
15.8% |
15.8% |
Dell Weighted PC Market Share (%) |
15.8% |
16.2% |
17.5% |
19.0% |
19.9% |
Supply: Firm Knowledge, Gartner, Khaveen Investments
We anticipate the corporate’s AI PC market share to extend considerably by 6.8% from 15.6% in 2023. Furthermore, we estimate Dell’s weighted PC market share to extend from 15.8% to 19.9% over the forecast interval, gaining share from different corporations. Given Lenovo’s high rating in general PC shipments and AI PC numbers, we anticipate it to outperform the market and achieve extra market share. In the meantime, we anticipate Dell’s market share to strengthen relative to different rivals, aside from Lenovo.
Verdict
Income Projection by Section ($ mln) |
2023 |
2024F |
2025F |
2026F |
2027F |
Servers and networking |
17,624 |
18,157 |
19,457 |
20,929 |
22,618 |
Development (%) |
-13.6% |
3.0% |
7.2% |
7.6% |
8.1% |
Storage |
16,261 |
17,228 |
18,253 |
19,338 |
20,488 |
Development (%) |
-9.4% |
5.95% |
5.95% |
5.95% |
5.95% |
Whole Shopper Options Group (PCs) |
48,916 |
55,886 |
67,773 |
75,392 |
80,026 |
Development (%) |
-16.0% |
14.2% |
21.3% |
11.2% |
6.1% |
Whole |
82,801 |
91,271 |
105,484 |
115,659 |
123,132 |
Development (%) |
-14.3% |
10.2% |
15.6% |
9.6% |
6.5% |
Supply: Firm Knowledge, Khaveen Investments
All in all, we forecast Dell to realize a sturdy development price of 10.2% in 2024, largely fueled by the growth in AI servers, AI storage and AI PCs. Our confidence in Dell’s trajectory stems from its deliberate integration of AI applied sciences throughout its server, storage, and PC choices, showcasing its dedication to enhancing efficiency and adapting to dynamic market wants. Notably, we analyzed that Dell’s AI servers, exemplified by the PowerEdge XE9680, exhibit distinctive prowess in varied AI duties, leveraging NVIDIA’s H100 accelerators for superior efficiency, albeit barely trailing behind HPE’s AI servers. In storage, we imagine Dell’s PowerScale F900 stands out for its potential to reinforce AI workloads, catering to the calls for of AI modeling and coaching, regardless of our evaluation figuring out a decrease aggressive issue rating in comparison with rivals like NetApp and IBM. Nonetheless, we anticipate this AI storage answer to bolster Dell’s stronghold within the enterprise storage market. Moreover, we imagine Dell’s foray into industrial AI PCs, that includes NPUs, positions the corporate as a entrance runner within the AI PCs market and might be poised to seize a big market share. Whereas each Dell and HPE/HPQ function throughout comparable segments, we imagine HPE holds a bonus in AI servers, whereas Dell excels in AI storage and AI PCs.
Based mostly on a reduction price of 8.3% (firm’s WACC) and terminal worth based mostly on the business’s common EV/EBITDA TTM of 13.36x, we derived an upside of 20.8%. Thus, we price Dell as a Purchase with a goal worth of $150.89.