Dell's strong performance and growing order book support a bull thesis; the stock can reach 595 if data center demand continues.

It's time to delve deeper into analyzing Dell. This is our segment to highlight technology. There was some good news for Dell. I'll start, as you know, with the bright side of the picture.

Let's start from there, even though the stock is down 4% today.

Well, Dell is a very interesting company. Just like Intel and AMD, its value has almost tripled since the beginning of the year. So, it has witnessed a tremendous movement.

At the same time, unlike these two companies, Dell's price-to-earnings ratio remains quite low . There are a number of positive factors that support the company. You have huge numbers of AI-dedicated data center servers that they sell, in addition to the upgrades they make to their existing asset base among their traditional customers.

Then, more traditional customers are also making proactive upgrades not only to bring some of these AI capabilities in-house in some cases, but also to increase their overall computing capabilities and ability to interact with what employees are doing now using proxy AI.

So at this point now, the question was, since we are seeing upgrades in data centers, that is at least part of the good news there. Do you expect this trend to continue? Well, right now, Dell has an order backlog that spans nearly six quarters, as they are still trying to produce servers for data centers.

Now, as I understand it, this is not due to a stumbling block in their own manufacturing, but rather to the ability to supply some of those rarer components.

So the question becomes , once these components become more widely available, and if manufacturing catches up with demand, will these data centers continue to deal with Dell and take advantage of its legacy base and supply chain, or will they become self-reliant and source those components individually?

Oh, memory is definitely putting pressure on Dell's profits. For some of those servers that they install, memory has become a major source of cost, and in some cases it accounts for half the price of the server.

So, there are definitely challenges and obstacles there. Memory is a real problem.

But at the moment, unlike HPE, Dell was willing to accept lower profit margins in order to gain market share and continue supplying those systems. Given the shrinking profit margins, do you think a name like "Dell," whose stock price you mentioned has seen a significant increase , still has opportunities?

What are the future prospects for it, especially considering the current valuation with profit margin pressures due to memory, and the potential for data center expansion ? You know, when you're trying to balance all of that?

Yes, we are looking at a price-to- earnings ratio that is above 30, which is not something you usually like, but on the other hand, their sales have increased by 50% and I think their net profit has increased by more than 100%.

So, when you look at these numbers, that assessment is not yet excessive in my opinion.

The problem is, once again, how long will this continue? Is this a one-time push for these data centers, whereby they will later move away from Dell and be forced to return to their traditional businesses?

However, there is a very interesting point: it has been reported that 70% of their installed servers, which are their regular in-company servers , are over 9 years old , meaning they are several generations old.

Many companies are choosing to move forward and try to update or upgrade those systems at the moment. So, you have this as a positive driving factor that can also offset some of the potential slowdown in demand for AI servers in data centers.

When we consider low profit margins, we find that Dell captures a portion of the business, but with lower profit margins. Is this a problem specific to "Dell", or are there better players on the market?

I do n't necessarily think there are better players than her . I think she was willing to sacrifice a small portion of the profit margin to gain market share.

And when I think about what you said about HPE being more selective out there, with a smaller order book, it's not on the same scale as what we've seen from Dell at the moment.

Ah, I think Dell has a really impressive supply chain . They have manufacturing operations that they carry out themselves in a number of different countries. It is clear that they also use a lot of outsourcing.

Their supply chain held up, and that's why I think many data centers chose to go ahead and buy off-the- shelf Dell components rather than trying to get them directly. They have long-standing relationships with their suppliers.

In many cases, they naturally have long-standing relationships with many of the companies to which they also supply their regular servers. But that supply chain looks pretty resilient for Dell and is one of their biggest advantages at the moment.

Okay, I mean you said you were happy to buy at this price with a P/E ratio above 30, but the fact is their sales have increased by 50% and their net profit by 100%. I don't know how long that will last.

When you see Dell here at 554, what is your basic perception of where its stock price is headed?

595 was the last high. Do you think we'll get there? I certainly believe we can do that . They are still actively selling servers . Their order book is constantly growing, and as long as that continues, it will extend even further.

The hope is, you know, that after six or seven quarters they might be able to lower some memory prices. If those prices for some of those advanced chips were to fall, we might see an opportunity for a much better profit margin in the future.

At the same time, we may see the pressure continue for some time.

But, you know, the baseline scenario for Dell, again, is that I don't see a slowdown in their current trajectory in the short term. I think the biggest question over the next two or three years will be whether they can continue to sell in the data center market , and whether that demand will continue.

But they are in a very good position and are showing a very strong performance.

Yes, and I found it interesting when she talked about what we see in terms of demand, and how artificial intelligence contributes to supporting the growth story here. But with regard to storage as well, Morgan Stanley noted that Dell actually recorded the largest increase in its market share of revenue among external storage companies and manufacturers of such equipment in the second quarter.

So, it's still gaining market share, and it's still making sales, as you pointed out, Ryan Kelly. That's good news for Dell, Mr. IT Director at Legato Financial.