What’s the deal with Dell’s AI server sales? They talked them up like the next big thing—'AI is the future! AI will change everything!' Yeah, well, apparently, it didn’t change their sales numbers! Probably sold at negative margins, server with a NVIDIA graphics card like everyone else. The layoffs continue!
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Dell's role in AI servers is simply supply-chain middleman providing some access to the expensive and scarce GPUs. The rest of the server is commoditized. Dell is brutally cutting headcount and OPEX because it's extremely difficult to make any money on AI servers. The special pricing needed to sell these big server deals is typically very close to the COGS of the GPU alone. The rest of the components, chassis, software, and all the overhead burden is basically thrown in for free at a loss to Dell. Big server deals are brutal, and you have to rely on Storage and CSG to hit your gross margin / Opinc targets. If the storage business (60% gross margins)_ is lagging, and you aren't growing CSG..the PNL gets ugly.
armature hour