Dell, HP, IBM, Intel – is there life left in the old dogs?

Welcome to AI Collision 💥,

In today’s collision between AI and our world:

• Four days, four “old” dogs, four opportunities?
• Dell’s amazing transformation…thanks to EMC
• Boil the Doge

If that’s enough to get the old timers learning new tricks, read on…

AI Collision 💥

Last week, I posed the following question: do the stalwart companies like Dell (DELL), IBM (IBM), Intel (INTC) and Hewlett Packard Enterprise (HPE) have life left in them?

Companies like Nvidia, Broadcom, AMD, Palantir and Meta are all massive beneficiaries of the explosion of AI into our world – but what of the legacy tech companies? Once dominant names of the PC era, have they just packed up and shipped off? Or are we forgetting that if you can survive this long you probably know a thing or two about how to adapt and evolve?

That’s why over the next four days, we’re going to look at each one, see what they’re doing (if anything) around AI and even quantum computing and ask is there’s still value and life in these old dogs.

We’ll start with Dell today, look at IBM on Wednesday, Hewlett Packard Enterprise on Thursday and on Friday we’ll finish up with Intel.

Let’s crack on…

At the University of Texas in 1984, Michael Dell started building and selling custom PCs. That dorm-room operation exploded into the $84 billion giant Dell Technologies (DELL) is today.

Over the decades, Dell has grown itself selling PCs, computer peripherals and accessories, but it was its merger with EMC in 2016 that transformed the business. EMC was in data storage and cloud services. In effect, computing and cloud infrastructure.

Arguably it was the most important part of Dell’s history, other than Michael Dell building and selling his own PCs in 1984.

That’s because with artificial intelligence at the forefront of every major move in tech, Dell finds itself at the centre of the AI infrastructure boom and as relevant and important as it was in the 80s.

The most significant aspect of this is its work providing AI servers to Elon Musk’s xAI. Along with SuperMicro (SMCI) in 2024, Dell was tapped to provide the servers for the Colossus AI cluster Elon Musk was building.

Now it looks like Dell is about to lock down another $5 billion deal with xAI to expand that. What’s clear is that Dell is angling to be the go-to hardware backbone for Elon Musk and all his AI grand plans.

Keep in mind that it already has deep partnerships with Nvidia for GPU-driven servers, plus a robust cloud ecosystem tie-in with VMware (formerly under the Dell umbrella, though it’s spinning off). Add that all up, and Dell’s building a fortress-like position in AI hardware and data centre solutions.

It’s also worth noting that Dell has been doing some work in the quantum computing field too. What’s notable is it is working on a hybrid classical/quantum computing platform with IonQ (IONQ). It’s still early doors but it certainly gives some long-term potential to this long-standing titan of tech.

Now, if we look at whether the market appreciates Dell’s foray into AI infrastructure and the possible quantum opportunities down the track, I’d say that it probably doesn’t.

For the rolling year, Dell is up 44%, which is a good result. But then you see that it topped at $179 in June 2024 and that it’s at a 34% discount from there. Add to that, it’s trading at a 21x price-to-earnings ratio, it’s profitable, and it even pays a (albeit small) dividend.

With more AI work to come, and possible doors opening with quantum, maybe there’s some life in this old dog over the next few years after all.

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We’re building some of the world’s most powerful supercomputers – right here in Britain. In fact, Britain’s new AI supercomputer will be TWICE as powerful as Elon Musk’s Colossus supercomputer in Memphis.

There’s a simple way to position yourself to potentially see big returns in the coming months.

Capital at risk

Boomers & Busters 💰

AI and AI-related stocks moving and shaking up the markets this week. (All performance data below over the rolling week).

***not a lot booming this week!***

Boom 📈

• Intel (NASDAQ:INTC) up 2%
• Apple (NASDAQ:AAPL) up 1%
• Samsung Electronics (KOR:A005930)

Bust 📉

• Palantir (NASDAQ:PLTR) down 23%
• Vertiv (NYSE:VRT) down 15%
• Broadcom (NASDAQ:AVGO) down 10%

From the hive mind 🧠

• Co-scientist. Has a nice ring to it. I think this is the way AI is going with productivity in the workforce. When you start somewhere, you’ll be assigned an AI co-worker and they’ll help you to do everything you need.
• The iPhone 16e – all “new” and jam-packed with AI specific features. Really though, it’s just the iPhone 16 but cheaper. And that’s just fine.
• AI influence and interference in elections is certainly not something that’s going away any time soon. And it’s set to play its part yet again in the elections in Germany. Whatever the outcome, we’re sure someone will blame AI for their loss…

Artificial Polltelligence 🗳️

Weirdest AI image of the day

Boiling the Doge

ChatGPT’s random quote of the day

Thanks for reading, and don’t forget to leave comments and questions below,

Sam Volkering

Editor-in-Chief

AI Collision