Dell Boosts Forecast Through 2030 Off AI Boom | Bloomberg Tech 10/7/2025

Key Concepts

• AI Servers: Hardware specifically designed to run AI workloads, often containing powerful GPUs.
• Hyperscalers: Large cloud service providers (e.g., AWS, Azure, Google Cloud) that operate at massive scale.
• CAPEX (Capital Expenditure): Funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.
• Profit Margins: The percentage of revenue that a company retains as profit after all expenses are deducted.
• Turnkey Solution: A product or service that is ready for immediate use upon delivery, requiring no further assembly or configuration.
• Systemic Imbalance: A widespread and fundamental disequilibrium within a system, in this case, the AI infrastructure supply chain.
• Tokenized Deposits: Digital representations of traditional bank deposits on a blockchain, enabling faster and cheaper transfers.
• Prediction Markets: Platforms where users can bet on the outcome of future events, often using real money or cryptocurrency.
• Golden Touch: The phenomenon where a company's stock price significantly increases simply by being mentioned or associated with a highly influential entity (e.g., OpenAI).
• Consumption Metric (Tokens): A measure of the actual usage of an AI model, often quantified by the number of "tokens" (pieces of text or data) processed.

Dell's AI Server Growth and Market Implications

Dell Technologies has significantly revised its growth estimates through fiscal 2030, almost doubling its outlook for sales and profit. This optimistic forecast is primarily driven by the surging demand for AI servers. The company projects a 7-9% top-line growth and clear bottom-line growth, indicating strong traction in its AI server business, supported by a substantial backlog and anticipated margin improvements.

Brody Ford from Bloomberg highlights Dell's success in the AI server market, noting that someone needs to purchase, package, and sell the chips, and Dell has emerged as a key player. The anticipated sales growth rate is healthier than Wall Street expected. However, a key concern for investors remains the profit margins, which are expected to stay tight, in the single digits, due to the competitive nature of the AI compute and server market (beyond NVIDIA). Moving with scale often requires accepting lower margins. Dell has managed to navigate this, securing large deals with companies like CoreWeave. The rapid pace of demand means that while Dell booked $5.6 million in business, it shipped $8 million in service, indicating the cost of moving quickly in a tight supply chain where priority often comes with a higher price.

IBM's AI Strategy and Software Offerings

IBM, often perceived as a legacy company, is making strategic moves in the AI space. They announced the integration of Anthropic models for their coding assistant. This is significant because Anthropic's model is highly favored for coding, lending credibility to IBM's tool for large enterprises. The implication is that large organizations, seeking a more regulated and secure environment for AI adoption, might prefer vendors like IBM over direct consumer-facing tools.

IBM's software offerings are diverse, encompassing financial processing, transaction management, and coding assistance. They specialize in custom development, helping large enterprises organize their data, run AI models, and integrate AI into existing coding environments. This software segment is currently IBM's largest business, a fact often overlooked by investors, distinguishing it from the "outsourcing IBM of years past."

Broader AI Market Dynamics and Investor Sentiment

The market has experienced a "breather" and some profit-taking after a strong rally, particularly for chip companies. Despite concerns about potential "AI bubbles," the overall direction for the tech sector is expected to remain positive. Janet from RBC Market Analysis emphasizes that mega AI deals involve substantial CAPEX and infrastructure investment, which largely stays within the AI ecosystem, providing long-term visibility for AI spending.

The recent deal between AMD and OpenAI, where AMD's CEO expressed full confidence in OpenAI and highlighted the massive opportunity in compute availability and speed, underscores the market's focus. OpenAI's financing primarily comes from deep-pocketed investors and hyperscalers, with limited reliance on credit or debt, which is seen as a comfortable position. The immense demand for compute is a key driver, benefiting numerous companies and fostering an ecosystem where multiple entities collaborate on AI infrastructure.

A critical question arises regarding the profitability of AI: if demand for compute is "unlimited," why do companies like AMD offer incentives or NVIDIA make equity investments in OpenAI? Janet explains that while hardware providers (infrastructure, data centers, cloud compute) are clear beneficiaries, the "killer app" on the software side is still unknown, making it harder to pick winners. She maintains confidence in AI leaders, citing Jensen Huang's prediction of a tenfold increase in compute demand. For hard fundamentals, Janet points to hyperscalers' double-digit earnings growth, improved efficiency from AI advertising and cloud computing, and upward revisions of earnings estimates and revenues (like Dell's), which provide clear visibility as far as 2030.

CoreWeave's Expansion and Infrastructure Strategy

CoreWeave, an AI hyperscaler, is actively expanding its offerings through both organic growth and strategic acquisitions. They recently announced the purchase of UK-based Monolith AI to broaden solutions for industrial manufacturing companies. This follows other acquisitions like Open Pipe and Weights & Biases, all part of a vision to provide a turnkey solution from infrastructure to software, supporting clients comprehensively.

CEO Michael Intrator states that CoreWeave achieves significant profit margins on its infrastructure sales and is scaling at an incredibly fast pace. The broadening of software solutions is seen as an effective way to attract new clients who will pay for both infrastructure and integration services.

As a key customer for Dell, CoreWeave views Dell's optimistic forecast as a signal of strong demand across hyperscalers, driving profits. Intrator acknowledges the "systemic imbalance" in the infrastructure side, which is stressing supply chains. CoreWeave has significantly increased its contracted pipeline of power from 2.2 gigawatts to 2.8 gigawatts (excluding Core Scientific), forging strategic relationships with providers like Galaxy Digital for continuous power blocks. The previously announced acquisition of Core Scientific, which provides CoreWeave with over 500 megawatts of contracted infrastructure, is a small part of their overall portfolio but highlights their focus on securing power.

Regarding OpenAI, CoreWeave supports them and uses their infrastructure. Intrator also highlighted CoreWeave's own significant deal with Meta, a minimum of $14.2 billion, set to come online in 2026, as another example of the massive infrastructure demand in the AI space.

Other Tech News and Market Reactions

• BNY Mellon: Explores tokenized deposits using blockchain technology to reduce costs and speed up transfer times, a move mirrored by other banks.
• Apple: Facing a probe over data collection practices, with the SEC investigating whether Apple pushed targeted ads.
• XAI: Elon Musk appointed Anthony Armstrong, former Morgan Stanley executive, as CFO of his AI venture, XAI. Armstrong also oversaw finances for Musk's Twitter acquisition.
• Tesla Model Y: A cheaper version is expected to be unveiled, achieved by engineering costs out of the battery pack and motor. This aims to attract incremental consumers, especially as the $7,500 tax credit is phased out. Elon Musk is reportedly more interested in advancing self-driving capabilities than expanding the vehicle lineup to compete with lower-cost models.
• OpenAI "Golden Touch": Companies mentioned by OpenAI, such as Figma, HubSpot, Salesforce, and even Mattel, saw immediate spikes in their stock prices. This phenomenon, similar to NVIDIA's "golden ticket" effect, suggests investor relief that these companies might be integrating with OpenAI rather than being made redundant by its services.
• Figma's CEO, Dylan Field: Described their collaboration with OpenAI as a partnership, not a negotiation, with engineers working closely. He expressed excitement about the "new toys" and tools AI offers technologists, seeing immense possibility in systems working together, though acknowledging the future is uncertain.
• Prediction Markets (PolyMarket): NYSE is investing in PolyMarket, valuing its data for large institutions. This move, along with the trend of tokenization, represents a path for innovation in exchanges. PolyMarket, previously shunned from the U.S. market in 2022, is re-entering through the acquisition of derivatives operators and is working with regulators (SEC, CFTC) to potentially bring prediction markets under the same regulatory oversight as traditional equities and options.
• OpenAI's Infrastructure and Growth Metrics: Brad Lightcap, OpenAI COO, emphasized that the company is "tremendously constrained" by untapped demand, leading to a "torrid" pace of revenue growth and necessitating massive infrastructure investment for enterprise, user experiences, and new products like Sora. He stated that the key metric for success is not valuation (e.g., $500 billion) but consumption tokens – the "purest essence of utility." OpenAI's API processes 6 billion tokens per minute, a figure that has grown significantly since August. ChatGPT is evolving into a "starting point" or "operating system" for various computing tasks, integrating applications like Zillow. This ambition requires immense computing power. ChatGPT has reached 800 million weekly users, a significant milestone representing almost 0.1% of the world's population, highlighting its rapid and widespread adoption since late 2022.

Synthesis and Conclusion

The transcript paints a vivid picture of an AI industry experiencing unprecedented growth, driven by insatiable demand for compute power and infrastructure. Companies like Dell and CoreWeave are capitalizing on this by expanding their AI server and infrastructure offerings, while legacy players like IBM are strategically integrating AI models to remain relevant in enterprise solutions. The market, while showing signs of profit-taking after rapid rallies, remains fundamentally bullish on AI's long-term trajectory, with significant capital flowing into infrastructure build-outs. The "Golden Touch" effect of OpenAI highlights the market's sensitivity to AI partnerships and integrations, signaling a shift towards collaborative ecosystems rather than pure competition. The discussion also touches on the evolving regulatory landscape for new technologies like tokenized deposits and prediction markets, indicating a broader integration of digital innovations into traditional finance. Ultimately, the narrative is one of immense excitement, rapid innovation, and a systemic transformation across various sectors, all underpinned by the relentless demand for AI capabilities.