Ep. 230: Talking Special Guest, NVIDIA, VMware Explore, Salesforce, Dell, Pure Storage, HP

welcome back the 65 is live it is our Friday show and there is nothing I like to do more then crank this thing out Daniel how are you doing my friend and Dan IES how the heck are you great to be here with the two goats got this I don't know man looks like a triple goat I mean can there only be one goat okay maybe we could I don't know you're the goat I'm happy to be the third wheel in this group man what a good look group of guys and uh you know I mean nice look at that hat Dan Daniel what is that can you give me a little backstory okay maybe y'all knew it but Dan and I took a little short trip into Aspen I'm here right now I usually say I'm in an undisclosed location but Daniel why the cowboy hat aren't you from Chicago oh no I'm a native Texan now um I don't know if everybody kind of understands the the the importance of uh me committing to my Texas Roots although I did spend my first 40 years in Chicago I've moved here I got boots about three months ago my daughter's got me boots for my birthday and then um who who the heck has boots and no hat in Texas now I'll admit the dress I'm not quite there yet but piece by piece by the way when I heard Dan was coming I I felt like I had to do something I mean best dressed guy in Tech you know I I feel so ordinary you know white button-down shirts blue sport coat coats I mean maybe I could pull this off D what do you think D could I do this like could I do the whole ensemble I normally do the the the the goofy sneakers and then pull this off with it and maybe start going on air that way and then maybe even like change the colors of the cowboy hats yeah D I know Morehead starts wearing a pink sports jacket dude who knows man you know we can't we we can't ape the Dan goat here we've got to come in with our own special uh Brew here but it was funny Dan uh we were in kimosabi getting Dan this cowboy hat and and literally saw a guy that was aping your outfit yes right yes yeah purple purple shorts man like he was lit up like a Christmas tree was pretty awesome I almost asked him are you trying to knock off Dan Ives by chance strong respect respect strong respect yeah yeah let's let's jump into this show here uh obviously special guest Dan eyes wed Bush we're going to be talking Nvidia earnings going to break down VMware explore Salesforce earnings Dell earnings peer storage earnings and HP earnings but before we dive into that I do want to make a uh uh what's a disclaimer for Daniel Newman and Pat Morehead we are not Equity analysts uh we are industry analysts and don't say anything we say for investment advice Dan IES on the other hand uh does uh do that but hey before we dive into these topics uh gosh we got to talk a little apple maybe a little meta uh Dan like we saw you you know was funny it was it was it was super Wednesday with Nvidia but I saw you talking Apple like what's going on here look I mean when you're talking as you guys have spoken about the revolution in AI it's now going to start coming through Apple I think look from a consumer perspective they will ultimately really own our opinion the AI I think 25% of the World when they actess AI it's going to be through an Apple device so so my whole point is we can talk of course Godfather of AI Jensen Microsoft but when you think about Ai and you and you guys do a great job talking about it's really about second third fourth derivative and that's also why you could open AI in terms of this sort of arms raise bidding process does Apple get involved does Nvidia get involved they're The Golden Child of AI yeah totally and uh um real quick got to get this out it's so funny people are like oh I I don't believe in the supercycles okay let's throw super cycle out let's say we move uh iPhone refresh from four years to three right because we know there's only one model that does Apple Ai and that's the the highest end uhuh 15 and everything else does not do uh the good stuff if Apple ships something that that is is super compelling we saw a little bit of it at WWDC then I believe that we will uh be entering a super cycle So Daniel Newman uh a lot of talk about open AI uh out there hundred billion dollar valuation maybe Apple's gonna throw in some money maybe Nvidia is gonna throw in some money yeah uh what's what's your quick yeah I appreciated uh Dan I the the the retweet on my little uh you know the little apple uh Android e ecosystem compar I think that's where this is sort of heading that that got a lot of you know some of the haters came out there a lot of dial they always do but that was a great I thought that was one of the best Tweets that I've seen this week in t well thank you and by the way it was really interesting because like yesterday I went on uh I was on with Tyler on power lunch I was supposed to talk inidia and they're like we're enough Nvidia let's talk about this Apple news and so I jumped on and talked about that and I said look if they make Siri digestible you know they integrate open AI they make Siri work they start building it all natively into the productivity the calendar Suite the male suite and then they start making the right connections with the apps that's absolutely going to drive this cycle people starting to feel it in the front line of use Siri has been terrible for a long time it's been really not useful but if that usefulness starts to pop up I think that's going to drive things really quick Pat the only thing I'll say really quickly on the the analogy is look we've got these two parallel channels of development going on you got all open like rock with meta these companies that are going to build and basically make it available to the world developers you know and then you've got these sort of more closed which the irony of open AI being closed and then of course you see anthropic and others and and I think um what we're going to end up with is is these two massive ecosystems it's not going to be one's going to win and the other's not going to win and it's not going to be two even but meta and open AI are s sort of setting the standard to be the open AI is the Apple meta is the Android that is going to build kind of a list of players down that are stream that are going to either go open go close but it's going to go fast and I love all the haters but I'm just gonna say this right now Pat they're all wrong they're all wrong we the three of us are going to be right um and time will be the proof I agree uh 30 seconds on meta they made a massive disclosure uh yesterday uh check out my analysis on forbes.com and they not only gave stats like downloads on hugging face which is 10x year-over-year 20 million in the LA past month and that's essentially downloading a model to go and do something with uh Cloud token volume and this is the measurements uh of the biggest cloud CSP 10x increase January uh to July uh meta says largest csps I'm just guessing that's Azure uh and AWS uh leap partners and the these are early access Partners 5x increase since llama 3.1 this is absolutely taking off and and what I loved was their Enterprise take which was you know case studies from AT&T Accenture Goldman Sachs door Dash nura Shopify and zoom and a few of them had hard numbers like AT&T 33% Improvement in related respones ex centure 70% productivity and 20 to 30% quality improvement in report creation Shopify 40 to 60 million inferences a day we've got closed we've got open AI they're both rocking guys let's dive in it was super Wednesday uh two days ago Man Dan IES you were like pretty much on every TV show all the time uh you have coined uh Nvidia CEO Jensen Wong is the Godfather of of AI Dan Dan IES let's start off with you talk to me about earnings what are your thoughts I mean I look I get in terms like people pick about whisper numbers for the October quarter and to me it's a masterpiece I mean in other words like there's no way that you could deny this revolution's happening and I think it's not just about the numbers that they put up in terms of 30 billion 32 and a half that's probably going to be closer to 34 bill ion Blackwell delay all the sort of noise put that to rest by stock takes a little Brea there it gets hit a bit I think it goes higher I think it's an all time it goes into all-time highs and this thing gains theme because the most important thing and I I think you guys have talked about it it's derivative second third fourth what does it say for Salesforce service now paler Microsoft Oracle hyperscalers it's a trillion dollars of capex it's a fourth Industrial Revolution you come off that call I think it's more of a you get the popcorn ready and now it's waiting for the second third fourth derivatives yeah I'll I'll double down on that I mean I've talked about Network effects I've said you know we've seen zero Net Zero net one so all the designers chip manufacturers everybody involved in this in the semiconductor supply chain should be doing well the ones that are going to do well are doing well and then you got kind of this flow out the oems you know we've seen some boom bust they've got to figure how to add more value make money but they're getting the opportunity being by being attached the the Dells and HPS super they it's up to them to figure out how to attach the services the layering of the cake with the devices we just talked about with the uh applications talked about you know service now Raptor the now platform Salesforce benof came out this week really ambitious but look the other thing and know this will be my I know we only have a few minutes I want to make sure Pat you get to talk before Dan has to leave but is is I I'm really get frustrated with this whole you know kind of people looking at a digestion you know this is not the internet cycle we are not going to see this thing implode the way the internet imploded this is it's a different cycle there is a digestion period when you spend a 100 to 200 billion in capex you cannot stand that up offer services instantaneously show revenue and Satia Zuck the Sundar they're all basically sitting there they're saying we will not let this cause our Demise by not investing enough they all understand it and so when all the Bears are like oh there's no one using it first of all Pat you gave a bunch of great instances where they and that's just BS they are using it but we do need to understand there is digestion between uh the the the capex in and the Opex out no this is good stuff and listen I I I knet it out like this there's nothing stopping this train for 12 to 18 months Downstream does not matter for 12 to 18 months you've got hyperscaler fomo right nobody whether it's meta Microsoft Google Amazon it's pedal of metal on capex you know and until we see investors their invest were demanding reduced capex uh the beat really goes on and I I want to hit the growth areas really quickly that I don't think people are fully comprehending the first one is the first buildout was with the hyperscalers the next buildout is in tier 2 csps and we heard Dell talk about this last night and you know let's put super micro aside for a second but super micro and Dell are the two SE uh tier2 CSP uh drivers the third element is is the Enterprise and we saw a little bit of that outline and right now you know as Dell's Jeff Clark said the Enterprise is really in Phase zero moving into phase one uh poc's uh third growth area is content right they're not just selling GPU chips they're selling racks they're selling trays they're selling GPU chips they're selling multiple networking ships and oh by the way they're selling cables and let's not forget software every new generation including Blackwell uh we have seen uh Nvidia sell more software and that software started off you know 15 years ago as low-level drivers and here we are with Blackwell generation called Nims and these are actually microservices applications you're seeing them be spit out or cranked out by multiple isvs and this is essentially the easy button for um driving this forward yes there's competition but it's not going to matter because the market is growing so heavily biggest competitor are uh hyperscaler their own custom Asic uh AMD is the closest direct competitor and they will likely end the year I believe at uh 10% market share not for the whole year but but ending their calendar year uh we will see Intel likely making an impact in 25 and 26 they're making a small impact with current gouty today but it's only at $5500 million and compare that to amd who's at $4.5 uh billion forecast all right guys Dan we gotta get you out here to go on more TV shows talk to uh you know all I'm going to Asia I'm going to Asia again this week so again it comes down to like that's where like I always say you can find AI Revolutions in the 10th floor of your office building of Metro North for Transit and that's why I think many of the Bears they continue to focus on their spreadsheets and try to find AI in their spreadsheets hey hey Dan just as as you run off two things one is I'll be I'll be running to Berlin for uh I'll be I'll be at EA checking out what they're doing on these devices but Pat I think we need to give Pat a shout you know I I need to commend this this nerd you know we were gen we were gening what sort of differentiates each of us as analysts we're having a little fun and Pat is the Deep technical guy did you see this guy call out the mask change on Fort he called out the mask change in real time I appreciate that but look P Patrick's like here oh my Ros let me deal with this well it was kind of funny now I felt a little bad because I literally brought this out live on CNBC nobody was talking about it stock dips and I'm reading from uh uh CFO uh and it's like what's a mask set and it was funny I was like I've never really had to explain a mask set I I tripped a little bit and then about a minute later deep di no I listen I try to I really do try to simplify man you saw Bloomberg's headline said that they had a mass change they didn't Mass Jensen said I know but the headline was mass change Mas change all right guys thank you so much for having me awesome thank you for everyone watching take but take care buddy there we go Dan IES that was fun now it's back to us this is good ah I appreciate by the way Bloomberg uh deleted uh deleted that tweet did they did they yeah that was a m that was actually not just a tweet though Pat that was actually the name of the the article there was an article headline and then it was the whole thing so I mean look I I actually will tell you I listened to him and if you were if you're not a real techie and you're not familiar with what a mask change is and I mean I know more about it now than I ever did I'd heard the term that was as far as i' ever spent you know um and you listen to Jensen you might not have heard that clearly on the first listen yeah so every chip change that you make that's that uh I'll call it a metal spin as opposed to like a poly poly spin needs a new mask and a mask is what is created to go into a Foundry like tsmc Samsung Foundry and ifs so Dan 15 minutes on Nvidia and other stuff let's dive in I'm going to call my own number uh VMware Explorer 2024 uh Dan and I were both uh in Las Vegas at that show uh we got a rare opportunity to talk with uh broadcom CEO Hawk tan right after he got off on off stage doing his uh keynote it was pretty awesome it was one of these uh postgame uh interviews just just to break stuff down uh key highlights I mean this was all about uh the private Cloud right uh VCF so so today right 15 years ago the public Cloud uh was born it was created by AWS and it was essentially uh running infrastructure and services uh that that were not on Prem and not in a Colo that you're you're renting and managing and developers wanted to go there uh because of the flexibility uh that they would get uh used to take uh you know four months to spin up a compute resource six to spin up storage and my gosh sometimes nine months to spin up networking and going to the public Cloud you could spin it up immediately could swipe a freaking credit card uh to get in there and you had almost unlimited resources 15 years later you have companies like VMware nanic and red hat building Stacks that run on fr that mimic the public Cloud uh at a substantially lower cost as long as you're keeping those resources busy hey if you don't want to manage your infrastructure you can do that at a Colo and uh and kind of do uh something in between so uh uh VMware cloud found Foundation otherwise known as VCF or the short name of it they went to uh 9.0 and that was going from 5.2 to 9.0 but we won't go down that path it doesn't even matter um that was kind of aligned with ECX uh ESX but anyways here here's the upshot we have been waiting VCF has been around uh for a while but my take is this is the first time it's actually ready with a full stack and what the company is calling Advanced Services to go along with it and one of the Advanced Services is private AI uh you have Security Services you have you know essentially good hygiene uh Services uh you have all the Ser I mean I'm not saying it has as many services as AWS but it's getting pretty darn uh close the only thing I'm trying to figure out Dan is how do you get the scalability of the infrastructure right um now now out of the other side of my mouth if you want to have guaranteed instances with AWS you're not going to buy those on the spot Market at the lowest lowest price you need to make a one-year twoyear uh commitment and if you want to share Services across regions that's going to cost you a lot as much and there's a reason why AWS has 20 30 points of of of op in in there and the other rule of thumb you know public Cloud uh the profit they make AWS again nothing wrong with profits every dollar invested into CPU instances you can charge 3x every dollar you put into GPU instances you can charge 8X and one of the most interesting thing with this private AI offering was that VMware upped its game on virtualizing the GPU gpus uh virtualization you know started close to 25 years ago and I had first started it even at AMD uh allowed you to virtualize the CPU and then they virtualized the storage and then they virtualized the networking with uh with NSX and now virtualizing the GPU uh so it's not just sitting idle and I think what I heard out there was a um gpus are idle 30% of the time because they're hard hard to do that hard schedule them uh especially you know when you're bopping between um uh you know even doing uh inference so super impressed with the progress uh the company uh has made there Dan I definitely left some oxygen a lot of oxygen for you look I mean Hawk tan we had the opportunity to sit down with Hawk on a couple of occasions we did a deeper dive conversation that we did a postmortem immediately after his Keynote um you know what I loved most about it was he is very clear in his vision on what he wants to do you hit a lot of the the product and and capabilities P but look you know he's using terms now like AWS on Prem and you know we've kind of heard that and you mentioned it a little bit but this is a sea change right now of he's not just saying like I feel like the hybrid cloud and on-prem companies have kind of been a PO itic like you're still going to need on Prem as you make your journey to being an all Cloud company we want to help you he's kind of saying I want to challenge the SE Suite the boards of uh directors on really making a substantial pivot away from public Cloud um and that is different than kind of the attached to public Cloud strategy we've heard you know we have heard Green Lake has been focused on this kind of control plane some of the things you can do with red hat enables some significant hybrid and multicloud capabilities but he's kind of saying like VCF becomes your control plane it becomes your first stop it becomes the main place to build your Enterprise it stack and um his business model is also being carried out in real life too Pat like right in front of our eyes like he's kind of doing what he does he's saying like we're going to take eight what 8,000 SKS down to just a handful we're going to make this easier to buy but also it's going to be you're going to have to make a bigger commitment so there isn't really price increases but you have to buy all the stuff so there is a price increase if you were only buying Vere for instance and and kind of seeing that play out you know it was sort of interesting Pat in the room the initial part of the keynote kind of felt like everybody was a little quiet you heard things like you know hey everyone well and it was like pin drop but as Hawk presented through that uh opening Keynote you actually seemed like he helped people um you know they they he he put them um into a more comfortable situation they dropped their guards a little bit and they opened up and you could feel the energy pick up by the end of the presentation people are starting to see and here's the bottom line pack if the thesis is true and I think you and I should test this in our economics lab is if the thesis is true then there is a case to be made that you know uh workloads uh remaining on Prem or new workloads being deployed on Prem um and by the way this isn't an there is there's not a win or takes all here I just want to be clear there's not a winner takes all there will be public Cloud he kind of thinks it's just for bursting it's almost the inverse of what the cloud talks about with Prem um but Pat in the end I would be very surprised as numbers start to come out that you don't see that he's executing I just think people underestimated this coming in they overestimated the the the power of the ecosystem and Hawk doesn't make these decisions lightly so I I was encouraged um but I think the numbers over time will tell tell the whole story yeah what I'm really interested in seeing Dan and you know we need to be very careful um um most you know you can just check the growth rates of hyperscaler hyperscale hyperscaler Enterprise Cloud providers and compare that to the growth of the on-prem folks and you know I think you mentioned this with with Green Lake you know there are some really good green shoots out there but we need to see you know 50 60 70% growth in in on Prem uh Cloud uh for for those numbers to to compare to Azure and AWS and and Google Google Cloud I mean AWS is a is a hundred billion dollar company at this point right um You Know I'm all I'm all over the Barkley's thing you know 83% of cios are going to move a workload uh back on Prem they're not talking about 50% of their workloads uh I do expect though and this is probably the most important piece these will be strategic workloads uh that are steady state um but again again the the thing that's stuck in my craw is is how do you how do you get instant growth uh in that and and that's why I think the workloads that will be on there will be ones that are steady state and then the ones that are burs those applications you will put in in the public cloud and and the biggest biggest fight's going to be now is we're going to do the inference baby where are you going to do the inference on that 80% of the Enterprise data that's on ground so hey any any final words Dan you want to make or you want to move no there's always a lot to cover but uh we've got 30 minutes and five five more topics four more topics four more topics right yeah let's let's give them their due coverage yeah so let's uh dive into Salesforce here you know Dan uh we've got a you know did did AI uh make a difference um you know we've got a CFO that's uh that's leaving is that you know uh uh you know again we've seen a ton of Executives uh being replaced and and leaving and moving on what are your thoughts about earnings yeah so Salesforce had a had a bit of a banger and and again you know I made the comment tough Daya report on Wednesday and you know you know some people didn't understand what I meant by that but what I basically meant is the entire news cycle seemed to be very heavily Invidia Centric as the entire economy was weighing on that but companies like Salesforce and some of the others we'll talk about today actually also reported on that day um look they beat they beat they beat now again I'm gonna kind of give you both sides here so you know the model that Ben off has put out from a standpoint of Revenue and and in EPS growth has been largely on on on the money and so that is a really encouraging thing he he talked a lot about agentic Ai and the idea of kind of deploying these agents as being a big part of the company's AI strategy um and so you know he was it was indicative but what I didn't really hear in the earnings like there was a lot of kind of the AI narrative and that's what we mentioned earlier in the conversation about how this sort of plays out in the multiple Network effects but we're still not entirely clear how much people are paying for additional Salesforce because of AI yet you know you got data Cloud which I think is a powerful play for the company but they are executing you know they got pretty lean last year they made a lot of uh operational efficiencies uh in the business that was various overheads and of course Personnel related um but the company is also you know I mean they're delivering almost $10 a share annually on on earnings I mean they are a very profitable company you know and then the first day of the year they have a huge chunk of their revenue already accounted for because so much of it is subscription beauty of SAS businesses um you know Pat the the the growth has has been a little bit modest if you want me to be you know like you're talking about um you know you you run down the line I think it was about 8% Revenue growth um you know they're growing in sales Services platform um you know in that 10% range a little slower in marketing a little faster in in integration and analytics but you know that's one of those things where you kind of look at you go well they're you know they're trending to 38 billion they've hit law of large numbers they can only do so many price increases so a lot of their variable growth has to come through either net revenue expansion which means selling more products to their current customers or it has to come uh from going out and winning net new business which is a you know which is difficult in the economy that we're in because it is still tougher out there than most of us want to acknowledge you know when it comes to this and and and these tools and Technologies are expensive um but where I will kind of leave this pad is is it's a really healthy business it's very profitable it's very growth oriented it's very sticky um what do I want to hear and see as we head into dreamforce this month um I want to hear and see how the company is going to incrementally grow Revenue expand Revenue at the customer level by adding AI capabilities and then I want to understand who's paying for it like our customers willing to pay a dollar more $10 doar more remember you got hundreds of thousands of companies running on this technology if if you can get every user to pay a dollar more that's massive you know in terms of impact so what is the AI impact and and and Pat this will be the topic dour every day for me for the next 10 years at least two as we try to see how this capex turns to Opex and and Salesforce is an absolute bellweather for whether or not AI is being consumed at at the at the Enterprise level yeah so Salesforce is is one of the earliest movers on Enterprise AI I mean even before of AI was cool or maybe 3 months after you know we had the open AI kind of uh explosion uh they rolled customers out uh customers like Gucci right that actually were it was this is more machine learning than generative AI but uh they've done the best job being able to show some of the potential impacts and and what I think is happening is they're balancing Two Worlds and we saw Benny off talk about this uh one or two quarters ago when when the numbers you know just just weren't growing like people had expected and know people were expecting like Nvidia growth numbers uh when this first uh came out but what we had during uh the pandemic is we had uh customers uh buying a lot of tools uh new tools and there's been digestion uh on that and people are assessing you know you know how this goes Dan hey uh before we buy new new tools and pay more money I want to make sure that we're getting uh the full value of the stuff that that that we bought and I I do think that's what's happening in the customer base of Salesforce even though you know in some of their their key verticals and applications they are the clear uh industry leader you know and you know we see Mark Benny off tweeting hey we're the number one in CRM for like the 80th year right um but but within that installed base moving that forward is tough there were a lot of questions on the call uh about Ai and it was it was interesting most of the questions seem uh defensive like hey in the era of AI you're not going to need as many seats right and then Benny off talked about well we're going to consumption uh as opposed to number of seats and we think that that is is going to grow and uh it's going to sound like a broken record but their data cloud data Cloud growth is always a precursor of great and big things to come and you know I don't always nail it but uh when geni hit you know the first thing I said is you got to get the data right and sure we've heard garbage in garbage out for the past 40 years but it's Amplified when it comes to gen and your the difference with generative AI is that you are mixing types of data that you never thought that you would mix before that's the one thing and the second thing is that the ways of extracting and doing prompt engineering you can get data out of way you can get um gosh why are we on Dell earnings here um you can get yourself into a uh into a mess and and bring private data um out into the public and that can be very bad and the thing is if you don't get your data right you can potentially issue completely garbage results that you have to stick with with a customer as we saw with Airlines who was giving you know doing a three for one and they had to give the customer that based on that mistake I'm looking forward to the Big Tent Event in San Francisco uh coming up I think it's going to be all gen and it's going to be all data Cloud hey are you uh are you hearing me I am am like my yeah okay I'm back like my super killer brand new laptop I'm not going to say who it was it's from it just totally froze up on me so that was weird yeah that was weird I'm on my uh I'm on my new AI PC laptop and you look great by the way on your new laptop I'm using the old uh the old uh fake looking at the camera we'll see if that works so hey let's I'm going to call my own number here uh on Dell earnings Dell had quite a banger in their Q2 FY 25 earnings I alluded it alluded uh to a little bit of it uh but they had an absolute Banger uh in their in their data center uh Group isg which is the data center group up 38% but what was fire were the AI servers up freaking 80 uh perc amazing storage was off by 5% and you know what storage usually follows servers uh in the call they talked about how good the profitability was I believe that that storage being off was about nonell Technologies storage maybe vast data so they pull in the revenue for vast data but it's at a lower margin compared to their own and again bastate is not a storage company it's a software compy company but they did need to likely pull in a a third party for that uh maybe it wasn't vast data maybe it was pure probably pure not vast data but uh they're not giving those uh types of details and the interesting point too the thing I really loved and Jeff Clark just did a great job on bringing this out and guys I really recommend to go listen uh to a conference call you need to go in and read the transcript or look at the conference call but Jeff just did a Masterwork of talking about what is going on here uh isg uh is targeting uh two AI server categories tier 2 csps these are not the non hyperscalers and then Enterprises um you know tier two is to be like xai right we saw Michael Dell uh tweet about that installation and we we see that half that went to Dell and half that went super micro uh you have these GPU uh GPU focused uh companies that um uh again do GPU uh as a service uh Dan you been uh talking a lot about these guys but those are very much on the move and then there's Enterprises you know Jeff talked about uh okay we got through experimentation and we're just going into uh POC so not like these large installations of PCS I was a little a little surprised by that uh but that would also um indicate kind of how HP and and their numbers uh not moving as much in Enterprise AI big an HPC AI but but not so much an Enterprise uh a uh AI um backlog 3.x billion and the pipeline was multiples didn't give us a number 4X 5x uh 3x but multiples on top of that so the pipeline looks strong a good uh backlog which is about twice as much as they did in the in the last uh quarter final comments you know a little surprised uh a little bit surprised on uh CSG the PC group particularly with what we saw from HP and Lenova was off 4% huge consumer declines around 22% and commercial was flat HP commercial was was up not too certain what's going on there there weren't a lot of insights on the call there was a lot of discussion about the win 10 to win 11 transition October 2025 they're optimistic about aips but can't figure out uh the market share uh sorry the uh the numbers compared to HP and Lenovo yeah you you covered it well um first of all you know side note but probably worthwhile um I think Dell got a real lift this quarter um and will more so into the future as some of these question marks rise around um super micro you know we saw Hindenberg published this short seller report they've been a bit of a they were a bit of a Wall Street darling and then they saw almost a 50% decline off their peaks I think as people started to kind of piece together that there was a bit of a house of cards there you know the the value ad is going to be so important and Dell is so much better equipped on the value ad on these systems oh my gosh Jeff talked about you know used terms I'd never heard about but yeah well you know like and and I said this you know when I was talking to some of the folks when we were getting briefed on everything and I said you know look I don't know that the market fully understands all the important contributions that Dell does to make AI optimized so and like I said it's not really servers it's racks it's not just rack you know it's buildout and then it's in you know it's really being able to help companies understand the full requirements to integrate and you know this goes back to what some of the alarm Bells were with the AMD acquisition with ZT is that kind of who owns this sort of system design buildout and and I think it is a bit of a village and especially by the way um on AMD so if they want to compete with Dell or sorry they want to compete with Nvidia but on the Dell side if they want to really be able to drive margin which has been where all the all the concern is has been around the fact great Revenue growth but you're it was at a lesser margin than in the past and that has been one of the push and pulls is where do they keep adding value so they can stack more margin into every one of these deals and I think that's what Jeff really talked quite a bit about um they're really well positioned Pat on these tier tws really really well positioned and I do think you know I don't I mean Super Micro this isn't going to like be like world ending but I think there's going to be some hesitation that Dell could capitalize on immediately as people are kind of wondering what they're up to over there um the I'll spend a minute longer on CSG just because you really covered isg well um Pat look I know that we and at times you know uh we were talking back in the beginning of the year at CES about this device driven super cycle and I want to just basically say that I you said earlier let's take that word off the table I still believe in it I do think we're seeing a bit of a of a push that's going on right now in terms of the biggest demand like I think I expected a little more Q4 Q3 Q4 demand um I think we're seeing a bit more wait and see um I actually said I think apple is going to surprisingly drive a wave of co-pilot plus and aipc growth because people are going to start to see this on device experience and Enterprises are still more commercially attuned to um windows-based um but it's just showing up in the numbers csg's numbers were even softer than some of the others but you know Lenovo um HP we'll talk about here in a few none of them had particularly optimistic we talked to Enrique about it a little bit and we'll talk again on HP but like I think everybody's kind of starting to admit that there's a lot of excitement there's a lot of enthusiasm but it may be more q12 of 25 and even Beyond before this goes to scale and some of this tat with the best features like recall really only being reintroduced here in Q4 um there's still a little work to be done by the ecosystem and Pat you know you and I are going to try to be Educators to the market on what people can get from a co-pilot plus and an aipc but I think that's part of this n these numbers being a little soft is but it's also a reason for optimism that some of the best is still to come this buy cycle could be huge but it it hasn't happened quite as fast as I had initially anticipated yeah and just to clarify I didn't say that I don't believe in the super cycle I actually do it's just the definition of it and when I was on stage in January at CES on Intel stage calling this I said the second half would be the beginning of it yeah and yeah I I do feel like recall not going and that was the sexiest feature out there it's having an unlimited memory of of everything and it didn't get delivered right and I think that's an issue interestingly enough lunar Lake uh could be a real shot out there for volumes and you know there's this rumored 8 core Qualcomm right that that uh you know Cristiano Qualcomm CEO uh alluded to right the expansion of price points uh I will absolutely make a difference you know I think Enrique said 2025 50% sorry uh 26 it would be 50% but again the reason that number sound so low first off to premium offering and it's a little muddy what the desktop Market's going to be which is almost half of the entire PC market excuse me um and that's directly uh related to the Intel and AMD uh road maps and are they going to put big npus uh in their in their desktop parts right now the answer is no yeah yeah by the way there's a massive sort of opportunity for each of this the Silicon providers to sort of differentiate and each of the oems to differentiate in this category you know of course there's some benefit to some to see more standardization there's benefits to some for them to actually individualize these products a little bit patent I think we also heard something like a 7 to n% increase in ASP tied to I've heard different numbers but that's a pretty good range of what I've heard so you'll see Revenue grow just because these devices are more expensive um and so as it goes to volume you're going to see you know on a per device basis more Revenue should be more profitable too um as we see this ter hey I want to end this uh I want to end this one I want to read a quote from Jeff Clark uh on the call and and just to be factual here uh their AI margins uh were higher uh this quarter than they were in previous that they got raked over the coals uh and he says um we improved margins of our AI portfolio we did that with the same sort of price discipline but more importantly the engineering value ad and the technical value ad we bringing to our customers and the expansion beyond the specific node to the rack level deployment so our ability to add l11 l12 capabilities first time I heard those terms which are expert deployment system validation and testing the ability to help engineer the solution at our customer site the extension into networking the ability to Cable these things up and deploy them at scale that is allowing us to extract additional value in our AI deployments uh we have talked about all of this in our previous shows but the biggest reason that training runs do not complete is a uh networking breaking down and secondly it comes down to just to be brutally honest gpus flaming out so there we have it great segment I hope everybody out there give us your feedback we got two more topics Dan what happened to Pure Storage are they seeing the AI love what's going on yeah first of all you did have a great segment there so congratulations um yeah as we as we you know sort of head in you know I don't think this is just an AI play here with Pure Storage um you know this one was interesting it was a um kind of a narrow beat on the bottom and a and a narrow Miss on the top so it was kind of one of those really close company got kind of battered in the wake of its announcement and and let me tell everybody why that happened because I think a lot of times people go okay you barely missed you know but they pulled back on their kind of their tcv estimates um as it relates to their SAS growth so they had about a 600 million annual uh SAS estimate they pulled that number back to 500 million so I think that was where a lot of the res Rance about the the the name came you know they've been making this pivot to subscription to ARR and so showing a bit of a conservatism there I think was met with a bit of hesitation look you know I put out my note you know really brief note and I said here's what I really like about the company one is very focused on power so right now as the big what's at stake uh for this AI buildout is going to be power consumption pure is you know showing meaningful um efficiencies gain versus other uh tier storage and um you know they're that's that's a huge thing to be watching for against other modalities and the other thing I said you know and I and I and I'll lean into this and I feel like I have to lean to every quarter is this is a company that's obsessed with happy customers and is is you know the highest uh MPS score in the industry has remained that way for years on end um and so they're they're they're executing by being you know really customer Centric having very low attrition rates high growth rates which serves them well in this sort of pivot that they're making from where they are as a you know as a storage company to a fullon SAS AR company you know across their Evergreen uh portfolio um you know they're adding customers at scale they're growing double digits pad it's a little slower at 11% but they did see 24% growth of their subscription business so although they did pull back a bit on tcv on cloud they are still growing mid double digits solid backlog you know the company's in a in a good position overall so you know while you know Pat I think this company wants to make attachments to Ai and I think they're doing some other things pretty interestingly well you know in terms of different types of storage um that can be leveraged more efficiently for scale up scale out uh and direct a flash they also um you know they they play in that sort of cloud native space people don't talk about what they're doing there but the portworks AC acquisition was was material and then of course they play in the in the s space you kind of put all these things together they address block file object and they're able to basically help customers reduce power or you know I don't know I think the numberers like two to five um they have a TCO they they've they've you I'd love to do this in our Labs because that's what I like to do but I mean they're showing like 50% total cost of ownership reductions of versus typical configurations now again those that's why I'd like to do an our lab because I I want to know exactly what that is but you know lower cost to operate higher reliability path I mean that's the things that they focus on and I like that they're so outcome driven but the bottom line is this they've told a SAS story they slowed their SAS estimates Market reacted to to it that way but I still think there's a lot of um of optimism that should be around this company it's it's well positioned and of course expanding too even into areas like cyber resiliency yeah so let me add let me add on to that so uh first of all talking about the tcv Target right this is all about Evergreen one and and subscriptions uh they did reduce it by about $100 million from 600 to 500 uh and but there was a lot of discussion uh that these these these deals just take you know longer they're big they take longer to close but they have not shifted to uh capex uh purchases on the hyperscaler piece you know I'd love to know uh which ones they are uh unfortunately we didn't get to talk to Charlie this quarter but when we attended their big tent uh event in in Vegas uh a while back he actually talked through that that opportunity and floated that on the calls it's interesting uh you know I'm I'm going to have to drill down hey is a hyperscaler right at the top five or are they tier 2 csps this xai deal I believe that uh they were very much uh engaged uh with that with this split deal between uh dell and and and super uh and super micro uh the company has the right Str strategy I mean you know whether it's on Prem whether it's in a Colo or or you know if you want to to have I like to call them um uh you know basically hybrid Cloud connectors uh you can do that you can have one one management plane across all of your storage that's just the right strategy that's the future and if anybody doesn't have that you're not going to be successful in uh uh in uh in storage um on the competitive front there were some questions about uh you know qlc and Nan pricing uh they were one of the first uh in with qlc this direct flash is definitely a a differentiator uh in my opinion in some of these price uh sensitive uh workloads so hopefully we'll get to talk to Charlie uh next quarter but uh it it was hopefully you appreciated that analysis so hey let's jump into HP Inc I'm going to call my own number on that but I've got to open up my notes a bit here so mixed results uh really appreciated the time you and I both had with the CEO Enrique lores uh I'm GNA do kind of a highlights low lights and what they talked about the future so here are some of the highlights first time back to revenue growth in nine quarters that is a big deal and it was on the back of PC growth it was up 5% year onye and you know 6% on uh commercial units 8% on on Revenue was interesting kind of with the Dell decline like most of Dell Dell's business by the way commercial was flat at Dell and here we have um HP who did really well um consumer printing was up 2% print supplies is expected EPS within guide and this is a s not really a surprise but they do have uh a Fab for some of their printer chips they got 50 million bucks through the uh the chips act surprise here's some of the low lights a lot of highlights but you know there's some low lights printer margins and revenue it looked like uh tough China results aggressive uh price environment there consumer PC declines right we saw Dell at 22% they were off 6% their revenue increasingly enough interestingly enough was only off by 1% and I can attribute that I have all the data for it but could that be the aipc sell in possibly Commercial Printing was the uh the toughest there at off 5% and well EPS they hit um expectations it was below sorry EPS was well within the guide it was below the EPS expectations there's potential that investors uh thought that printing would do better than it did but hey stocks are about the future not about how they did they do expect uh fourth quarter uh print improvements uh with Cost Cuts even a resue revenue strength uh they do expect meaningful aipc sales growth in in the back half kind of just like what I said uh right now you know sorry 10 over a 10% Revenue mix in the second half and 50% mix um in 2027 a lot faster growth than consumer again that 50% in 2027 let's not forget that that's a split between desktop and notebook and we don't really know precisely what am and Intel are going to do in desktop and Ai and right now the definition of an aipc doesn't really factor in any let's say Nvidia uh GPU like Dell they're expecting to see commercial demand swell with the win 10 to win 11 uh adoption based off Microsoft cutting off nonfree support in October of 2025 you could still spend 60 bucks uh per head if you want to milk that but I don't see Enterprises doing that because you know they had a big swell during the pandemic in Enterprises of buying all new PCS those were win 10 and those are getting old done yeah I think you covered it I don't think there's really much I have to add there I I put out a tweet you can check it out on this topic I fortunately have to run to a meeting here at the top of the hour pad I will say that my comments in the Dell about CSG about the overall cycle is probably my strongest reflection of the opportunity I think these mixed silicon offer offerings these sort of mixed plat form differentiation the consumer cons uh commercial you know uh approach differentiation that's going to be focal point going forward getting a commercial to buy in in a big way P I'm really my my heart and head really says mid 25 I know this isn't like going to be the happiest news but you know again having been out and about done some shopping myself started to use these things really I'm super excited about it I'm super excited about it I just I really think um we're going to see this thing kind of ease in and and I like to say Pat slow it first then all at once and I think it's going to be that way it's really really a good time p and by the way two items we didn't really get to this week but the you know I I I said earlier apple and the glowup event is going to drive all device super Cycles I really do say that I stick with that Apple just is a Belle weather as much as you and I like to pick on them they will make this stuff digestible and people will see the power of it there and Pat we have to get on maybe even do a special I I don't know we'll figure it out but this Intel rumor swirling about Intel splitting I mean dude you hear activist investors now you're hearing splitting that has me really worried about what this next quarter looks like um it's tough times ahead but you know what even more important they've got to keep their heads down and execute gouty they got to execute on on lunar uh an arrow uh and then you know they've got to get these wins in an ifs I mean those are the three big box they better tick this is going to get wild though yeah ifs split right now is nonsense to me but we can talk I'm I'm just saying the rumor is really interesting yeah bringing in bankers and I mean I don't know how true this is but usually there's a little fire when there's smoke yeah I guess is that's to uh counter off a lip bhan cudata that uh that I'm I'm kind of expecting here right because what you want to do is you want to be ready right you've got you know a cudata potentially right led by Lipan uh coming in you want to be ready to be able to explain to the investors why you're on the path do the right thing you know by the way we had we've all these I Bankers who tell us this isn't the right time or this this would be the right time we're kind of doing the topic right now but Dan yeah I didn't mean to totally dive in but like just saw this stuff breaking as we were talking and the news is kind of snowballing by the by Monday who knows but Pat buddy great to seeing you man thanks for thanks start taking a vacation and working like oh I know like it's more of remote work right I've taken a few hours uh here and there yeah my my my vacation right we went to VMware explor thanks for visiting me here uh I I appreciate that and everybody hey thanks so much for tuning in always let us know how we can make this show better we really appreciate you this show is live there are no parachutes you can see us going back and forth and clicking up the wrong shot on and and uh and all that stuff but hope you appreciate that and you know we uh we make mistakes but uh we hope that you appreciate uh live we typically have about a thousand to 2,000 people uh who who are watching this uh live you know there's been some uh uh Twitter changes in how it's viewed and you don't even see the image uh when it's live so that has reduced uh some of our real time uh viewership but hey we appreciate you take care have a great weekend