Dell’s latest reinvention is here — and it reveals the AI boom happening ‘on-premise.’ The markets missed it 

In 2013, as Michael Dell fought Carl Icahn to take his company private, we asked a simple question in the New York Times: how do you keep the revolution forever young? It’s the same question Thomas Jefferson wrestled with when he argued no generation should be bound by the last one’s answers. Dell just gave his own answer again last week.

Four years ago, while others were playing with chatbots, treating AI as parlor games or sounding cataclysmic alarms over LLMs’ threats to society, Dell saw AI’s emerging utility as a new pillar of the economy and prepared his company accordingly, culminating in perhaps the 12th strategic reinvention of his enterprise strategy since he launched his business in 1984 as a 19-year-old in his college dorm room.  

Last week, Dell Technologies delivered one of the most lopsided beats of this earnings season. Revenue of $47 billion rose 58%, and adjusted earnings of $7.04 per share crushed already enthusiastic expectations of roughly $4.90. Dell booked a record $60.9 billion of AI server orders in a single quarter, exited with a record $95 billion backlog and raised its full-year outlook by $25 billion to $192 billion, roughly 70% y/y growth. 

The skeptics’ story about Dell has always been the same: a heritage as a mere assembler of parts, a legacy PC maker rather than an AI innovator. For years it traded below the multiple of its AI peers, and below the S&P 500. This bearish narrative was already dead in the water, but with this latest earnings release, there should be no doubt that Dell Technologies is positioned to be one of the biggest winners as the provider of the critical infrastructure on which the AI build-out physically runs.

Dell sits at the center of the data-center wave as the world’s largest server maker, assembling the compute, storage, and networking that hyperscalers and enterprises are buying as fast as it can ship them. What the skeptics missed is that Dell’s role spans the full range of how firms deploy AI, from the public-cloud and co-location facilities that anchor large-scale training to the hybrid configurations that let a company keep some critical workloads close to home.

And now, Dell is readying the firm to ride the tailwind of a new secular growth wave: the shift of enterprise AI spending to “on-premise” and the most smoothly integrated tech titan across IT segments in the world.

What are these mysterious words, on-premise, what does this actually mean and why is this important? Simply put, companies are moving their AI away from computers they rent in someone else’s data center – that of the hyperscalers Amazon, Microsoft and Google – and onto AI machines that they buy, control, and keep in their own buildings – closer to their own data, under their own lock and key, with heightened security guardrails. It is this shift........

© Fortune