What Dell's 2Q Earnings Means for Company's I.T. and A.I. Outlook

welcome back to Market on close let's talk some tech especially last night's reports Chris soundcard joins us from TD count managing director and Senior research analyst covering Dell hpq apple and many more Chris thanks for being here uh what was the highlight of the week that of course had Nvidia kind of as the poster child but it seems like some stuff in your category might have uh been more fun to talk about yeah thanks to Hollywood obviously Dell had pretty good numbers last evening um clearly the Highlight was the AI Ser business you know was interesting because um the the sales came in much higher than expected backl was roughly flattish Q over Q um but orders continue to improve I think the bigger thing also they spoke about the pipeline of AI servers you know being multiples of the backlog um I think the positive from there is the fact that you know we still in the early stages of this AI cycle and there's still opportunity with more Enterprise and also Sovereign AI purchases um I would say on the push back side obviously some of these are margin business and the PC recovery hasn't quite happened and I think storage has a huge potential with AI but that inflection still seems to be out there uh we haven't seen that quite happen in storage oil yet that you seen happen in servers and GPU is there more surprise potential in the server buildout right now than sort of the initial like Chip buildout have we kind of moved on to the next stage of the operation yeah I mean you know I think you know AI is still in early stages and there's a lot of opportunity for growth so you know in theory the servers would also move I don't know if it's going to be a linear progression upwards you might might be a little choppy uh it might be in fits and starts but I think if you take a longer term look you know the market should grow from here over the next few years or several years um but I I don't think it's going to be as simple as like lineally like you know trajectory up to the left okay uh Chris what about the message on uh personal devices to come back to hpq for a sec de to some degree as well the stuff that's been dragging on their businesses we saw a message from Best Buy that they saw consumer demand coming back is that a uh big deal does it move the needle at all that stuff when we're in this giant uh AI growth period does it matter I think in the long run yes I think you know people that don't wear AI PCS AI smartphones and things like that um clearly you know I think you haven't seen aips really like come into fru quite yet we're still in the very early stages you know depending on who you talk to like you know there are some chips which are country AI chips could be in some of the PCS later this year but I think the real opportunity for in 2025 and Beyond I think the like the one thing that always is kind of interesting is that you know HPS said this the path you know aipc could be a 5 to 10 person premium but the silic and content is also growing so it could probably be like you know maybe gross margin percentage wise neutral or no impact maybe some gross profit dollar upside but looks like you know it's not just the as but the cost is also going up but definitely looks like it's a longer term thing we haven't seen it quite yet and also people like said about the AI uh smartphones and apple release and things like that chis uh give me a thought on the potential for Big Apple refresh cycle are you are you a believer in the thesis yeah we do have pretty good numbers for next year you know I think Apple doesn't disclose iPhone units we have them around like you know around 215 million this year it's going up to 240 next year 240 is kind of back to the prior Peak levels in 20121 or so um so that's a pretty nice growth year-over year keep in mind I think there are two things going in your favor number one obviously is the fact that you know for the last couple of years units have been coming down because you look at next year compared to the last big cycle was in 2021 uh it's a three-yearly placement or so or so so 2025 unit should grow and then you lay on top of it AI so you should have a pretty good refresh cycle in 2025 uh for the iPhones okay so at this point we should uh assume that some of this is uh uh very real then or is Apple too expensive based on not knowing for sure yet no I mean I wouldn't say it's expensive dep so you know I mean the valuation is always up for debate with apple especially um you know depending on how we look at it but we do think that it's like you know the still upside for the stock so I wouldn't call it necessarily very expensive or any such thing um other thing is that I think we still in the very very early days of you know AI smartphones Etc or as some of the people in the industry call it um AI on the edge and I think there's a lot of you know opportunities for Apple to monetize it over the next seven years all right Chris thanks for the thoughts for