Dell believes the cost of DRAM and solid state disks (SSDs) will jump by 15 to 20 percent in the second half of 2024, and will adjust its prices accordingly to pass on the pain.

"We expect our costs to go up in Q2, all forms of costs, our freight costs, our component costs," vice-chair and chief operating officer (COO) Jeff Clarke disclosed on Thursday during the PC giant's Q1 2025 earnings call, before adding his prediction that "we see a step function in cost in the second half of the year driven primarily by DRAM and SSD."

That change will see DRAM and SSD prices jump, he predicted.

"Every indication - the lack of capital expenditure, low factory utilization and not a lot of wafer starts - are going to lead to less supply than the market demand that will be out there," Clarke explained. Much of that demand will be for AI servers, shipments of which earned Dell $1.7 billion in the quarter - a better than hundred-percent sequential improvement. Such machines need lots of high bandwidth memory, plus internal and external storage - so the laws of supply and demand will kick in and prices will rise.

Clarke cautioned that Dell will manage margins as prices shift, and has "begun to reprice things."

"And we'll be looking at the cost structures of SSDs and DRAM across our entire product portfolio and adjust accordingly."

Repricing has already helped Dell to improve the performance of its server business - both traditional kit and boxes for AI.

Dell presently has a $3.8 billion AI server backlog, and Clarke observed that Nvidia "is meeting demand" - leaving him confident H200 accelerators will arrive on time during its second quarter. B200 accelerators have longer lead times and are the cause of Dell's current backlog, he added.

Normal, boring, non-AI servers also did well, with Clarke noting demand "remained strong in Q1" and "grew for the second consecutive quarter year-over-year and the fourth consecutive quarter sequentially."

Clarke told analysts the market for business PCs has "stabilized" - even as commercial revenue in Dell's client solution group grew three percent to $10.2 billion and consumer revenue dipped 15 percent to $1.8 billion. The end of support for Windows 10 and the new crop of AI PCs coming to market saw Clarke opine that Dell is "bullish on the coming PC refresh cycle and the longer-term impact of AI on the PC market."

Dell's financial services arm doesn't get a lot of attention, but CFO Yvonne McGill chimed in that it's helping the biz to make headway with second-tier hyperscalers.

Revenue for the quarter was $22.6 billion, up six percent year-over-year. Dell's Infrastructure Solutions Group (ISG) grew by 22 percent to $9.2 billion, with record server and networking revenue of $5.5 billion - a 42 percent jump.

Clarke said growth at ISG reflected the fact that enterprise buyers are back in the market, while smaller and medium-sized businesses are yet to open their wallets for fresh tech spend.

Net income was $955 million, up from $578 million for the same quarter in FY 2024.

McGill predicted full year revenue of between $93.5 billion and $97.5 billion, with the midpoint of $95.5 billion representing eight percent growth.

ISG revenue was predicted to grow by 20 percent, and CSG by 11 percent. But other businesses were predicted to decline.

Execs predicted operational expenditure will fall - as you'd expect after Dell made deep cuts to its workforce. ®

https://www.theregister.com//2024/05/31/dell_q1_2025/