TIVP36: DELL (DELL): OVERLOOKED AI GROWTH STORY?

W/ DANIEL MAHNCKE & SHAWN O’MALLEY

TIVP36: DELL (DELL): OVERLOOKED AI GROWTH STORY? W/ DANIEL MAHNCKE & SHAWN O’MALLEY

07 September 2025

Daniel Mahncke and Shawn O’Malley dive into Dell Technologies, the legacy PC giant that’s quietly become one of the largest suppliers of AI infrastructure in the world. Once seen as a low-growth hardware player, Dell now sits at the heart of the data center buildout — shipping billions of dollars worth of GPU-powered servers to customers like xAI, Meta, and Microsoft. With a growing AI backlog, enterprise trust, and deep global reach, Dell might be one of the most overlooked players in today’s AI cycle.

But there are still key questions. The PC segment is cyclical, margins on AI servers aren’t as high as many assume, and Dell operates in a value chain it doesn’t fully control. In this episode, Shawn and Daniel unpack what’s driving Dell’s AI momentum, how its infrastructure unit became the growth engine of the business, and whether its capital allocation strategy is sustainable. They explore Dell’s scale advantage, service layer, and customer relationships — and ask whether it’s a misunderstood compounder, or just a hardware name enjoying a temporary AI tailwind.

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IN THIS EPISODE, YOU’LL LEARN:

  • How Dell became a global PC behemoth.
  • Why Dell managed to outcompete IBM.
  • How Dell’s business is structured.
  • Why the PC Market is struggling to grow.
  • What role AI Servers play in Dell’s future.
  • Whether Dell has a moat.
  • How profitable Dell is and how it allocates capital.
  • Why hardware is such a tough business.
  • Whether Dell is attractively valued at its current levels.
  • Whether Shawn & Daniel add DELL to The Intrinsic Value Portfolio.

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:00] Daniel Mahncke: The idea behind pitching Dell is pretty straightforward. There are three types of companies in the AI space. The ones building the chips, the ones building the models, and companies building the infrastructure such as Dell.

[00:00:12] Shawn O’Malley: And that market is growing fast. Dell’s AI business grew 50% year over year, but it’s hidden by the legacy business of selling PCs.

[00:00:21] Daniel Mahncke: Yeah, but that’s changing quickly. The AI server business is gaining share so fast that its growth will become much more obvious in the next quarters. And the question is how value creative that growth actually is for Dell.

[00:00:37] Intro: You are listening to the Intrinsic Value Podcast by The Investor’s Podcast Network. Since 2014, with over 180 million downloads, we’ve learned directly from the world’s best investors. Now, we are applying those lessons to analyze businesses and investment opportunities every week, helping you uncover intrinsic value. And now here are your hosts, Shawn O’Malley and Daniel Mahncke.

[00:01:09] Shawn O’Malley: Hey folks. Today we are covering a company that you probably know for laptops on office desks and beige boxes under monitors. But that same company is transitioning from this rather boring hardware business to being one of the biggest players in artificial intelligence in contrast of most other players in the AI space.

[00:01:29] Shawn O’Malley: Though this company stock has really not gotten the message. And we all know the famous example of who really got rich in the gold rushes of the 19th century. The, the folks who rolled the dice and struck it rich, got all the attention by finding gold. But the smartest money was those selling the picks, shovels and leases to that land facilitating that prospecting and, and gold rushes.

[00:01:51] Shawn O’Malley: And it might be a bit of a stretch, but Dell seems to be a sort of similar middleman in the AI sector facilitating the AI gold rush. It’s, it’s not building the LLMs or the chips, but both the chip makers as well as the LLM companies need Dell to run their businesses. So I, I hope you can explain this to us better, Daniel, and, and answer the question really of whether Dell deserves to be an AI darling two, or if the market has been right about leaving it unloved.

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