Nvidia's (NVDA, Financials) recent robust quarterly performance indicates a surge in enterprise demand for artificial intelligence technologies, a trend that Citi analysts suggest could favorably impact Dell Technologies (DELL, Financials) and Hewlett Packard Enterprise (HPE, Financials).
Asiya Merchant, a Citi analyst, noted Nvidia's management statement on enterprise artificial intelligence and said that year-over-year full-year AI-related sales are projected to more than quadruple.
Merchant underlined the possible benefits for original equipment manufacturers of merchant-owned business servers like Dell, HPE, and SuperMicro (SMCI, Financials). With both firms anticipating a total addressable market of $171 billion to $174 billion by 2027, Dell and HPE are expected to profit from a booming artificial intelligence sector. From 2023 levels, this shows compounded yearly growth of 20% to 25%.
With a price objective of $160, Citi maintains a Buy rating on Dell.
To satisfy increasing corporate demand, Dell has been aggressively extending its AI capabilities. To improve its AI solutions offering with fresh infrastructure, solutions, and services meant to accelerate and simplify AI workloads and data management, the firm just unveiled the Dell AI Factory.
With $11.64 billion in sales for its Infrastructure Solutions Group in its fiscal second quarter, Dell revealed a 38% growth. Record $7.67 billion in servers and networking revenue, an 80% year-over-year rise ascribed to increased demand for AI-optimized servers, drove this expansion.
Hewlett Packard Enterprise has likewise been bolstering its AI products. Working with Nvidia, the firm unveiled 'NVIDIA AI Computing by HPE,' a suite of co-developed AI solutions meant to hasten the acceptance of generative artificial intelligence in businesses. This covers HPE Private Cloud AI, a solution combining HPE's AI storage and compute capacity with Nvidia's AI processing capability.
With record AI-server income of $1.3 billion in its fiscal third quarter, HPE helped to drive a 10% growth in total income to reach $7.7 billion. The company's stock somewhat dropped in spite of this expansion, maybe because of worries about declining gross margins.
