Michael Dell, CEO and founder of Dell Technologies (NYSE:DELL), said enterprises are in the early stages of adopting artificial intelligence infrastructure, with companies increasingly viewing technology spending as a means of creating value rather than as a traditional IT budget expense.
Speaking at the Goldman Sachs Communacopia + Technology Conference, Dell said AI is prompting organizations to rethink business processes, though adoption is progressing at different speeds. He estimated that roughly 10% to 15% of companies understand the strategic importance of AI and are moving to implement it, while many others remain uncertain about how to proceed.
AI Factories and On-Premises Data
Dell said the company has 6,500 enterprise AI Factory customers and is helping organizations deploy AI closer to their proprietary data. He argued that customers in sectors including manufacturing, restaurants, retail and logistics may need AI operating at their facilities rather than solely in centralized cloud environments.
“For your most valuable data, your proprietary data, your hard-fought knowledge that only you have inside your company, you don’t want to send that off to somebody else,” Dell said.
He characterized enterprise infrastructure as a hybrid, multicloud environment, noting that, by various estimates, 85% of data remains on-premises. Dell said AI adoption is increasing requirements for compute, storage and networking, particularly as companies use more agentic AI systems that require additional CPU capacity.
Dell also said return on investment is changing the conversation around technology spending. He offered an example in which a company could reduce a 200-person task to 50 people with a $10 million AI investment, lowering costs while improving results. CEOs and business-unit leaders, he said, increasingly see AI as necessary to become more competitive and innovative.
Demand, Supply Constraints and Server Backlog
Addressing investor questions about the durability of hardware demand, Dell pointed to aging installed bases in PCs and servers. He said there are 400 million PCs more than four years old and 1.3 million servers that are 13th-generation or older. Higher memory costs have caused some customers to defer upgrades, he said, but those delayed replacements should eventually drive demand.
Dell said the semiconductor supply environment could remain structurally constrained, potentially becoming more difficult in 2027 than in 2026 based on what the company sees. Although costs are rising and Dell is passing those costs through pricing, he said customers are increasingly focused on securing product availability rather than solely on price.
He said Dell monitors for signs of double ordering or underutilized equipment and does not currently see them.
On AI servers, the conference host said Dell exited the quarter with $95 billion in AI server backlog after converting $130 billion in orders during the past year. Dell said the company evaluates neocloud demand by looking through intermediaries to underlying customer contracts, citing companies such as Anthropic, OpenAI, Microsoft, Google and Meta.
Dell said neocloud providers have been effective at securing land and power, while Dell’s ability to deploy large AI clusters quickly can provide value to customers. He also cited sovereign AI as a potentially significant source of demand outside the United States, saying most of the world’s 50 largest economies have two or three sovereign AI projects underway. Dell estimated that perhaps half of the opportunity could be outside the U.S.
Storage, PCs and Portfolio Breadth
Dell said AI workloads should support demand for enterprise storage because AI depends on data and increasingly generates additional data. He said Dell’s PowerScale and ObjectScale products are being attached to AI Factory deployments and noted that Dell IP storage grew 26% in the prior quarter.
He also identified robotics and physical-world AI applications as future drivers of storage demand, including multi-robot coordination in factories and transportation.
In PCs, Dell said revenue rose 20% in the prior quarter, though unit performance was weaker as average selling prices increased. He attributed the market pressure to higher memory costs, which have led customers to retain older systems for longer. However, he said knowledge workers will ultimately need modern PCs, including systems capable of handling local AI models.
Dell said the company’s broad portfolio across PCs, servers, storage, networking, services and financing helps make it a more convenient vendor for enterprise customers. He said Dell’s scale, supplier relationships and demand visibility provide advantages, particularly in a tight supply environment.
Operating Leverage and Long-Term Outlook
Dell said the company has used AI internally as part of a modernization effort begun more than three years ago. He said Dell’s operating expenses as a percentage of sales have declined to roughly 8%, which he described as a result of separating revenue growth from cost growth through workflow redesign and greater automation.
Looking ahead, Dell said he expects infrastructure demand to follow an S-curve as intelligence capabilities expand across data centers, edge deployments, neoclouds and hyperscalers. He said the distinction between traditional servers and AI servers is likely to become less meaningful over time as AI becomes embedded across computing infrastructure.
About Dell Technologies (NYSE:DELL)
Dell Technologies Inc is a global technology company that develops, sells and supports information technology hardware, software and services. Its portfolio includes personal computers, workstations, monitors, displays, peripherals and related accessories marketed primarily under the Dell brand.
The company also provides enterprise infrastructure solutions, including servers, storage systems, networking equipment, data protection, cybersecurity and cloud-related technologies. Dell Technologies supports organizations with consulting, deployment, managed and support services designed to help them operate data centers, hybrid cloud environments and modern workplace technology.
Michael Dell founded the company in 1984 and serves as its chairman and chief executive officer.
