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Dell's Comeback is the Perfect AI Case Study · In the Loop AI

0:00
Ejaaz: 30 days ago, President Trump went on camera and said the following sentence, go out and buy Dell.
0:05
Ejaaz: Since then, Dell stock has surged 80% following two back-to-back blowout earnings,
0:10
Ejaaz: giving them the biggest tech comeback in history.
0:13
Ejaaz: Their stock is up 240% this year alone.
0:17
Ejaaz: Now, Dell is probably the most boring written off tech middle aged company that I can think of.
0:22
Ejaaz: They were the guys that sold my school's IT department server racks back in the day.
0:26
Ejaaz: But a person that goes by the name of Jensen Huang saw something different.
0:31
Ejaaz: Dell sells servers and data center racks that are ideal for training and inferencing
0:35
Ejaaz: data models, specifically the GPUs that he sells.
0:38
Ejaaz: Now, the smart money is showing that AI is flowing down from the chip makers
0:42
Ejaaz: to the guys that actually put the chips together and run them.
0:46
Ejaaz: That's what Dell is doing right now.
0:47
Ejaaz: And in my opinion, Dell's put on a masterclass of how to pivot from a regular
0:52
Ejaaz: company to an AI company.
0:54
Josh: The Dell story is incredible. EJ, do you have any idea how old Dell is?
0:58
Ejaaz: No, very old.
0:59
Josh: 40 years old. They IPO'd back in 1988. And what's most interesting,
1:04
Josh: and I find, and the only reason why Dell is probably sitting in this position
1:07
Josh: is because of the founder who has been with them since the beginning of time, Michael Dell.
1:12
Josh: And he's really done an unbelievable job in moving this company through all
1:17
Josh: of the phases that have existed over the last 40 years.
1:19
Josh: When you think about 40 years ago, we didn't even have consumer laptops,
1:23
Josh: consumer computers. We didn't even have the internet.
1:25
Josh: So Dell has been around longer than just about anything. Michael Dell has navigated
1:28
Josh: through all of these transitions.
1:30
Josh: And this most recent transition to AI, he has done so again successfully.
1:34
Josh: Dell has not had the easiest route. In fact, if you switch the chart to all
1:38
Josh: on this thing that we're looking at here.
1:40
Josh: You'll see in 2013, they actually disappeared off of the stock market entirely.
1:45
Josh: Michael Dell took the company private at a $24.4 billion valuation.
1:50
Josh: Fast forward to today, clearly that is different. Clearly they've figured out
1:54
Josh: something new and novel.
1:55
Josh: And that's, I think, what a lot about what we're going to be covering on this
1:58
Josh: episode is the transition that was made most recently, the pivot into becoming
2:03
Josh: one of the major arms dealers in the AI race.
2:06
Josh: So who would have thought that this really old school company could turn itself
2:10
Josh: into a cutting edge, leading edge company.
2:12
Josh: And gosh, there are people who've been holding the stock for decades who are
2:15
Josh: very happy about what's going on. But let's get into what's going on, EJazz.
2:18
Josh: It's clear that Dell's kind of becoming the picks and shovels company.
2:22
Josh: They sit one layer down from NVIDIA.
2:24
Josh: What is their role in this large picture? I mean, two weeks ago,
2:27
Josh: we had that episode where we talked about the AI stack.
2:29
Josh: We talked about where each company sits. Where does Dell sit in this picture?
2:33
Ejaaz: Before I do that, what's hilarious is you asked me to toggle to all,
2:37
Ejaaz: but we can't go back prior to 2013 because they technically went off the public market.
2:44
Ejaaz: Yeah, they delisted. So they delisted. They went for, I think it was like $24 billion.
2:48
Ejaaz: And then they were kind of like in stealth mode for a bunch of years and then
2:52
Ejaaz: came back in an IPO in 2018, I believe.
2:55
Ejaaz: And that's the stock market that we're seeing or the stock chart that we're
2:57
Ejaaz: seeing right now. But to answer your question specifically, everyone knows that
3:02
Ejaaz: in a gold rush, what is the line?
3:04
Ejaaz: You've got to be the one that's selling the shovel specifically.
3:08
Ejaaz: And that's what NVIDIA became for the entire AI boom.
3:12
Ejaaz: AI models went kind of viral. Everyone was using ChatGPT, and smart investors
3:16
Ejaaz: thought to place their money in the chip maker, the GPU maker.
3:20
Ejaaz: Now, what is playing out with Dell specifically is someone has to be the one
3:25
Ejaaz: that assembles the shovels together into kind of like a working mind,
3:29
Ejaaz: right? Into like a working product.
3:31
Ejaaz: And that's what Dell does. they don't make the GPUs, but they make the racks,
3:35
Ejaaz: The cooling systems, and they
3:37
Ejaaz: help integrate all of NVIDIA's GPUs to actually make them functioning.
3:40
Ejaaz: There was a story that we covered, I think it was like a few months ago,
3:43
Ejaaz: where Microsoft had purchased, I think, $300 to $500 billion worth of GPUs that
3:49
Ejaaz: were sitting in warehouses collecting dust, because they couldn't get the power
3:53
Ejaaz: to set this up and power these GPUs.
3:55
Ejaaz: They also couldn't get the cooling systems and the wiring to get all of this set up.
3:59
Ejaaz: Dell kind of like spent the last 40 years creating and perfecting server racks
4:03
Ejaaz: for a completely different kind of adjacent industry.
4:06
Ejaaz: It was like the computing side of things. It was the gaming side of things.
4:09
Ejaaz: And then recently, they kind of pivoted to focus specifically on making their
4:13
Ejaaz: hardware perfect for AI models, inferencing, and training.
4:16
Ejaaz: And that's what has led to this like kind of massive partnership.
4:20
Ejaaz: Now, there's currently a really big conference happening in Taiwan.
4:23
Ejaaz: Taiwan, of course, is obviously the epicenter of semiconductor manufacturing.
4:27
Ejaaz: You've got TSMC out there.
4:29
Ejaaz: Jensen Huang flies there. I think it was like four to five times a quarter to
4:33
Ejaaz: kind of like chat to TSMC and make sure that NVIDIA chips and designs are being
4:36
Ejaaz: constructed in the way that he can.
4:38
Ejaaz: He's had a linchpin on all of this. And there's a big conference going out there right now where
4:42
Ejaaz: Jensen had some really important news updates to share.
4:45
Ejaaz: Now, the first one, the one that was being teased over the weekend,
4:48
Ejaaz: came from none other than Michael Dell himself, the guy that is a CEO and founder of Dell.
4:54
Ejaaz: And he goes, we have the first Dell slash NVIDIA Vera Rubin NVL72 rack live
5:01
Ejaaz: and going. And I actually have a picture of this right now.
5:04
Ejaaz: Now, if you're wondering what the Vera Rubin rack is
5:07
Ejaaz: it is um nvidia's latest gen uh gpu rack and it is going to be the rack that
5:13
Ejaaz: ends up training the frontier models from anthropic and open ai starting probably
5:17
Ejaaz: next year because there's usually like a six month lag they announced it about
5:20
Ejaaz: i think it was like four to six months ago and now we see the first live rack
5:24
Ejaaz: coming to fruition it's pretty cool so
5:26
Josh: This is amazing and unexpected in the sense that i i would have probably expected
5:30
Josh: to see someone like xai or anthropic or open ai getting the first Vera Rubin
5:35
Josh: chips working and actually running.
5:37
Josh: So it's interesting to see it coming out of Dell of all places.
5:39
Josh: And I think the reason why we see it out of Dell is because Dell is in a very unique position.
5:45
Josh: You mentioned like the picks and shovels and how it's creating a working mine.
5:48
Josh: Dell is hardware and AI distribution as a service. It basically builds AI factories
5:54
Josh: for anybody who wants them.
5:56
Josh: And this is their wheelhouse. One of the most interesting things that I guess
5:59
Josh: over time you start to develop relationships with over your 40-year career is
6:03
Josh: relationships with people who have sensitive information. We're talking
6:07
Josh: banks, hospitals, governments who are involved in defense, a lot of these kind
6:12
Josh: of more secure entities aren't really able to go off and use OpenAI or Claude
6:16
Josh: because a lot of the data is secure and they can't let it leave their servers.
6:19
Josh: What Dell is able to do is take this hardware ability, their ability to print
6:24
Josh: out these mines per se, and then give it to these individuals.
6:28
Josh: So give it to a hospital who really needs to use AI, but can't let the secure
6:31
Josh: customer information get off of off-premises.
6:33
Josh: Same thing with banks, same thing with governments. And what we're seeing here
6:36
Josh: is a really strong pivot from them in that sector in a way that I think they're
6:41
Josh: making a lot of progress.
6:42
Josh: I mean, Vera Rubin is one of the first things that they've done,
6:44
Josh: but they've also been working on a lot of other really promising ways of getting
6:48
Josh: AI hardware into the hands of not necessarily your average consumer,
6:53
Josh: but further down the stack, where if perhaps you don't have $100 billion to
6:56
Josh: build out a data center, you can actually just go and spend $80,000 to $120,000.
7:01
Josh: On the new workstation.
7:03
Josh: So just last night, NVIDIA Jensen Huang went on stage in Taiwan,
7:06
Josh: and he was announcing a bunch of new hardware.
7:08
Josh: And one of the hardware pieces that he released was this DGX station for Windows.
7:12
Josh: What is it? It's basically a Blackwell chip in a desktop, which is the most
7:17
Josh: powerful consumer grade supercomputer in the world.
7:20
Josh: And I'm not even sure we could call this consumer grade, because I'm not sure
7:22
Josh: how many consumers are going to spend $80,000 plus on the computer.
7:25
Josh: But essentially, what you have is a Blackwell chip that can sit inside of a
7:29
Josh: room without a custom tooling, without custom data center, and it can run a
7:33
Josh: trillion parameter model locally on your machine.
7:37
Josh: So they're kind of moving down the stack as well. And I think this is what investors are seeing.
7:41
Josh: They're seeing them partnering with companies like NVIDIA and really making
7:43
Josh: strong progress in the world of getting AI accessible to people through data
7:48
Josh: centers, through this consumer hardware, all the way up and down the stack.
7:51
Ejaaz: What I like about this is typically, if you wanted to go out and train your
7:56
Ejaaz: own model from scratch, you would need like billions to hundreds of billions
8:00
Ejaaz: of dollars to be able to do that.
8:02
Ejaaz: It was a very siloed kind of like access only to the rich.
8:05
Ejaaz: And what these new updates or hardware updates are doing is basically disseminating
8:10
Ejaaz: it to like the average kind of like medium sized startup that maybe has raised, let's say,
8:14
Ejaaz: 10 to 100 million dollars in funding for them to be able to buy out like a server
8:18
Ejaaz: rack or a couple server racks of this new NVIDIA DGX station.
8:21
Ejaaz: That you should be able to kind of like train some kind of a model, right?
8:24
Ejaaz: Running locally. Now, if you're listening to this and you're still like,
8:27
Ejaaz: well, I'm just a regular consumer. I'm not that business and I want to be able
8:30
Ejaaz: to access and run some of these models.
8:32
Ejaaz: They had another update. NVIDIA announced something called their new ARM-based
8:37
Ejaaz: processor called RTX Spark.
8:39
Ejaaz: So it's basically the equivalent of a GPU RTX 5070 that runs on your laptops.
8:44
Ejaaz: I'm talking about like, not even like a desktop PC, like an actual laptop.
8:48
Ejaaz: It runs at 100 frames per second. And it's, you know, it's pioneered or oriented around modern games.
8:53
Ejaaz: So what the coolest part about this is you can technically run some form of
8:57
Ejaaz: an open source frontier model on your laptop now using this new GPU or this new chip.
9:02
Ejaaz: And what I love about the directional trend that companies like Dell,
9:06
Ejaaz: ARM, and NVIDIA are kind of like aligning together to build is running models
9:10
Ejaaz: on bare metal or locally at home using your own private data.
9:15
Ejaaz: And I think this is, we've said this on previous episodes, but this is incredibly
9:18
Ejaaz: important because you don't want to hand over all your personal data to companies
9:23
Ejaaz: like Anthropic and OpenAI.
9:24
Ejaaz: At some point, it gets a little weird when you start sharing medical records
9:28
Ejaaz: or banking stuff or personal lawyering things. I know a lot of friends,
9:32
Ejaaz: Personally, that do that already. They kind of like upload their therapist notes
9:35
Ejaaz: and stuff and get like kind of information.
9:37
Ejaaz: I'm like, hang on a second. So Sam Altman technically gets access to that right
9:40
Ejaaz: now, right? They can use it for whatever they want.
9:42
Ejaaz: And I think it's increasingly important to own your own hardware going forwards,
9:47
Ejaaz: which is so weird when we have been in an all-cloud world.
9:50
Ejaaz: Now, when you were describing earlier on, Josh, the fact that like Dell is enabling
9:54
Ejaaz: kind of like bare metal training, you know, on-prem running,
9:57
Ejaaz: it reminds me of that story we covered with Amazon. Remember when we were given the Amazon bull case?
10:02
Ejaaz: Yeah. And we were talking about like them building out Amazon Cloud specifically for AI servers.
10:06
Ejaaz: One of their main assets is they run all the governments across the world's
10:10
Ejaaz: AI models because they can like set up racks for themselves.
10:13
Ejaaz: And Dell is kind of becoming a feasible competitor to that.
10:16
Josh: So yeah, I want to take a little side quest here and actually talk about a little
10:19
Josh: bit more of what NVIDIA announced last night because it was really impressive.
10:23
Josh: So we have that RTX Spark, which is this new processor equivalent to an NVIDIA
10:27
Josh: 5090. Now, for those not familiar, the NVIDIA 5090 kind of run of GPUs is the
10:34
Josh: cutting edge top of the line for consumers.
10:36
Josh: And generally, if you're a gamer, that's what you always aspire to buy.
10:40
Josh: That's how you can play your games at maximum settings.
10:42
Josh: It's now available inside of a laptop.
10:45
Josh: This chip used to cost thousands of dollars and be pretty beefy.
10:48
Josh: Like this is a huge chip that would weigh like, I don't know,
10:50
Josh: something like four or five pounds.
10:52
Josh: They've figured out how to compress it into a laptop. And not only that,
10:55
Josh: but it comes baked in with 128 gigabytes of memory. so if you're comparing this
10:58
Josh: to a macbook you're thinking well the max spec of a macbook is 128 gigs same
11:03
Josh: with this new laptop so on paper.
11:06
Josh: It's a direct competitor, at least as it comes to training and running models locally.
11:10
Josh: Now, it turns out that Microsoft has actually went ahead and released a laptop
11:14
Josh: with this new chip in it already dubbed the Surface Laptop Ultra.
11:18
Josh: And it seems as if it has the RTX Spark chip based right in.
11:22
Josh: It has a 15 inch mini LED screen, 128 gigabytes of unified memory.
11:27
Josh: And for anyone who cares, one petaflop of AI compute power.
11:31
Josh: I'm not even sure what that translates to, but it sounds like a lot.
11:33
Josh: And this is really interesting to me as someone who loves consumer hardware,
11:37
Josh: because I'm looking at this and I'm thinking to myself, oh my God, this is a MacBook Pro.
11:42
Josh: Um, and it's not, this is the first time I think in a while that MacBook and
11:46
Josh: Apple have had a legitimate competitor and something that can match its spec
11:50
Josh: for spec. And maybe the hardware isn't quite as elegant.
11:53
Josh: Maybe it doesn't have the single unibody aluminum design, but on a spec sheet,
11:57
Josh: it's really compelling. And it has all the ports that you would think of.
12:00
Josh: It has a mini led screen, which is exactly what the new pro display XDR has.
12:04
Josh: This is a serious offering from Microsoft from nvidia and i think it's it's
12:08
Josh: a testament to where things are headed which is like apple might not have their
12:12
Josh: monopoly for too long mac minis have been sold out forever clearly dell wants
12:16
Josh: this microsoft wants this nvidia wants this they're going to try to release
12:19
Josh: their competitors and this is a really strong first stop it's.
12:21
Ejaaz: It's really nice to see like a competitor to apple finally at least on like
12:25
Ejaaz: the hardware mode now now where my um where my kind of brain automatically goes
12:29
Ejaaz: is like microsoft is like this antiquated company right like all the governments
12:33
Ejaaz: use it there they They run like all the old Microsoft
12:35
Josh: Official. And how much does their AI suck? Like they're just falling behind.
12:38
Ejaaz: Dude, it sucks. Like I was listening to like some kind of like podcast over
12:43
Ejaaz: the weekend where apparently Satya Nadella is now like the PM of Copilot.
12:49
Ejaaz: Like he's gone back to the PM role to try and like figure out their Copilot
12:52
Ejaaz: thing like because their head of AI couldn't. So like Microsoft has been kind
12:55
Ejaaz: of been in the dark ages for a while.
12:57
Ejaaz: And like this new update, like this new hardware update brings them into like
13:00
Ejaaz: a new light, which is great.
13:02
Ejaaz: But the number one question is like, are you still going to use
13:05
Ejaaz: their software or their operating system so naturally i was like okay
13:08
Ejaaz: well it's great that they have this new piece of hardware that's consumer
13:11
Ejaaz: accessible but like are there is there any new ai that i can use on this and
13:15
Ejaaz: the answer might have come from jensen himself or nvidia themselves they released
13:19
Ejaaz: a new open source model called nemotron 3 ultra and it is officially the top
13:24
Ejaaz: open source ai model made by an american company um so typically they're
13:30
Ejaaz: Spoken about this a lot on our show, the top open source models have come out
13:33
Ejaaz: of China, which is obviously an anniversary to the US.
13:36
Ejaaz: But Nemotron Ultra is actually quite competitive. And we have like a chart here,
13:40
Ejaaz: a clip or rather a screenshot from Jensen's keynote yesterday or this morning.
13:45
Ejaaz: The time difference is so baffling, actually, which places Nemotron 3 Ultra
13:50
Ejaaz: on par to an extent with Kimi K 2.6, GLM 5.1, and some of the other Chinese open source models.
13:57
Ejaaz: But it's so much quicker the output speed is like
14:00
Ejaaz: by the looks of it like almost like three to five x
14:03
Ejaaz: quicker which is great to see um i don't
14:05
Ejaaz: know what your view on this is josh but i am betting
14:09
Ejaaz: that jensen nvidia and dell and all these companies that are
14:11
Ejaaz: kind of like forming an alliance to go hardcore on open source why because it's
14:16
Ejaaz: going to help with retail distribution across everything right like jensen doesn't
14:20
Ejaaz: know what consumers are going to use these bottles for but if you can get more
14:24
Ejaaz: retail consumers like you or i to buy these different laptops and use his chips,
14:28
Ejaaz: he ends up selling more chips.
14:29
Josh: Yeah, I know, I couldn't agree more. And there's a second factor to it,
14:32
Josh: too, about why they're going to want to continue to improve and push the open
14:35
Josh: source model frontier forward.
14:36
Josh: It's because what we're seeing happen with companies like Amazon and happen
14:40
Josh: with companies like Google is they're building their own custom AI accelerators.
14:44
Josh: And now these companies are beginning to train on more of a proprietary stack.
14:48
Josh: So Google now is training Gemini models largely on its own proprietary hardware.
14:52
Josh: It uses NVIDIA GPUs for a lot of it, but an increasing percentage of that training
14:57
Josh: is done by these TPUs or in the case of Amazon, their Tranium accelerators.
15:02
Josh: And that's not good for NVIDIA because they want the CUDA lock-in.
15:06
Josh: They want the NVIDIA GPU Blackwell Verirubin lock-in.
15:10
Josh: How do you get more of that lock-in to happen? You actually just give away the
15:14
Josh: software stack for free and make it optimally compatible with your hardware.
15:17
Josh: So as they're giving away this open source software, they're saying,
15:21
Josh: hey, you can go run it on our new RTX Spark chip.
15:23
Josh: In fact, it's available in a laptop that you can go and buy today or starting
15:26
Josh: in a couple of months, I think. I think they're releasing in the fall.
15:29
Josh: But they're starting to release the entire stack and they're offering the software
15:32
Josh: as that teaser, as that little value add where you can't get anywhere else.
15:36
Josh: If you want to run NVIDIA software, the best way to do it is on NVIDIA hardware.
15:40
Josh: And it kind of solidifies and ossifies that moat even more. So I think we're
15:44
Josh: probably going to see this trend continue.
15:45
Josh: We're seeing already this beating DeepSeq and a few of the other Chinese open
15:50
Josh: source models on a few parameters.
15:52
Josh: I'm sure it's just a matter of time until all those benchmarks are blown out.
15:56
Josh: If NVIDIA is really putting their full weight behind open source,
15:58
Josh: we're going to have a serious push into open source.
16:00
Josh: And that combined with the hardware that we're seeing with Dell,
16:03
Josh: with Microsoft, it's going to create like a pretty compelling offering for local
16:07
Josh: AI infra that I'm not sure the market has quite priced in just yet.
16:11
Ejaaz: So to bring the story back to Dell, Josh, I want to put our skeptic hats on for a bit.
16:18
Ejaaz: It seems kind of bubbly on the headline value, right? It's like a 40-year-old company.
16:23
Josh: It died, it came back to life. Now it's like going crazy.
16:26
Ejaaz: Suddenly you're like the AI company. This kind of like gives me the old bird
16:29
Ejaaz: story, you know, a shoe company that pivoted to running AI GPUs.
16:32
Ejaaz: I'm just like, what are you doing?
16:34
Ejaaz: Is Dell actually doing anything? Well, they recently released their quarterly
16:38
Ejaaz: earnings report, which wasn't just a blowout.
16:42
Ejaaz: It was their highest recorded revenue quarter.
16:46
Josh: And before you share, actually, I want to note that the post that we're showing
16:50
Josh: on screen is from Michael Dell, the CEO himself.
16:52
Josh: This is a founder-led company who is proud of the growth. He is in the trenches
16:56
Josh: making this happen. So I think that's noteworthy.
16:58
Josh: That's different than a lot of these other companies. It's like,
16:59
Josh: the founder's been doing this for 40 years.
17:01
Ejaaz: Yeah. It's the same guy. They run out of the same office in Texas.
17:06
Ejaaz: It's the same HQ. It's been there for four years, going off,
17:10
Ejaaz: going public, going off public, and then going back on it. It's absolutely unbelievable.
17:14
Ejaaz: Now, a summary of the recent quarter is they increased revenue 88,
17:18
Ejaaz: almost 90% year over year.
17:21
Ejaaz: Almost half of that revenue came from this new business unit.
17:25
Ejaaz: It's called AI servers revenue, up almost 800% year over year.
17:30
Ejaaz: Now, for all the skeptics that were thinking, hmm, I think Dell is kind of just
17:35
Ejaaz: advertising things that they don't actually have, the numbers actually disprove
17:38
Ejaaz: that pretty aggressively.
17:40
Ejaaz: They have over 5,000 major customers that are buying their server racks,
17:44
Ejaaz: including one of the biggest customer being NVIDIA.
17:47
Ejaaz: NVIDIA wants to distribute it through a hardware moat and Dell are the ones
17:51
Ejaaz: that are basically putting their chips together.
17:53
Ejaaz: They're bolting their chips together to make them efficient.
17:55
Ejaaz: They're the first ones to create the new Rubin racks.
17:58
Ejaaz: They have been kind of unofficially crowned a key partner to NVIDIA and like
18:03
Ejaaz: NVIDIA's success is basically going to drag them up.
18:06
Ejaaz: Now the previous quarters of this, at the end of the last financial year,
18:09
Ejaaz: they absolutely smoked as well.
18:10
Ejaaz: So it's kind of been like two to three quarters back-to-back that they've been absolutely killing it.
18:14
Ejaaz: I can't avoid the Trump story. Like, he praised Dell, technically,
18:18
Ejaaz: and now the stock's gone up. Like, I don't know what you think.
18:22
Josh: That's what I was going to say. I'm like, hey, you know who called Dell stock
18:25
Josh: going crazy back in February 10th of this year?
18:29
Josh: Donald Trump. He said, go buy a Dell.
18:32
Josh: And the close at that time was,
18:34
Josh: I think, $126. We're sitting here today recording this. It is now $450.
18:39
Josh: That is a 255% gain or even more. That's close to like 300% now at this point.
18:45
Josh: And that's coming off the back of a week that happened last week where they
18:48
Josh: were up 37% in a single trading session.
18:51
Josh: That's the largest single win that they've ever had in history,
18:55
Josh: in their 40-year history since they've been trading publicly for 30 years.
18:58
Josh: And it'd be interesting if it was a one-off, but this is very much a trend.
19:02
Josh: Another story that we have here today is the newest version of the Trump pump
19:06
Josh: with IBM, where he mentioned IBM over the weekend.
19:10
Josh: And on a Sunday night, it traded up 17% because Trump mentioned IBM.
19:16
Josh: And he didn't even say go buy IBM. He was just praising the CEO publicly on
19:20
Josh: camera and the stock is going ballistic.
19:22
Josh: So it feels like we do have to mention that this is a trend.
19:25
Josh: There are a few other companies you might remember, Intel being a major one,
19:28
Josh: where the government took a 10% stake in Intel.
19:32
Josh: Since then, it's up 300%. And this seems to be a trend over and over again.
19:37
Josh: So I think a lot of people who have been interested in participating in AI,
19:41
Josh: who have been seeing these Donald Trump clips, are like, oh,
19:45
Josh: all right, well, he's saying it, but the stock's already up so much.
19:47
Josh: It's probably not going up any higher.
19:48
Josh: The reality is that anytime he's called something, it's gone nuclear.
19:52
Josh: And I guess that's part of the cycle that we're in, where like you are the president
19:57
Josh: of the United States, you say something, the market reacts.
20:00
Josh: It's similar to like a meme coin. Like it feels like we're watching meme coins
20:04
Josh: pump. It's like you watch for what one guy says, and then the stock goes ballistic.
20:07
Josh: Like you mentioned, there are numbers to back this up. Like
20:10
Josh: Intel and IBM have actually been having pretty amazing quarters, same with Dell.
20:13
Josh: But there is some frothiness happening here in the sense that one president
20:17
Josh: can deliver one line to send a stock up 20%.
20:19
Ejaaz: Yeah, it's this weird, cloudy, murky investment thesis that kind of like involves
20:25
Ejaaz: being crowned by Trump himself, but then also like the numbers and the customers
20:29
Ejaaz: and the purchases are from very legitimate people and companies.
20:32
Ejaaz: It reminds me a lot of the Intel story where I think it was like a year and
20:36
Ejaaz: a half ago, Trump was like, Intel is going to be an amazing company,
20:38
Ejaaz: very key to accelerating AI in the US.
20:42
Ejaaz: And that has been an amazing trade so far, right? I think the stock is up around
20:47
Ejaaz: 300% to 400% since he made that announcement.
20:50
Ejaaz: NVIDIA purchased $5 billion worth of equity. The Trump administration bought
20:54
Ejaaz: 10% of Intel, which is now up $30 billion as of today's stock price.
21:01
Ejaaz: And so I start to think about Trump being pretty key to forming these partnerships,
21:07
Ejaaz: I bet you because he told NVIDIA or asked NVIDIA to purchase that kind of equity
21:11
Ejaaz: stake in Intel, he's kind of doing similar things with Dell.
21:14
Ejaaz: And if you're wondering why this is the case, the answer is pretty simple.
21:19
Ejaaz: Trump or America in general does not want to rely on Taiwan or Asia in general
21:26
Ejaaz: for building the most foundational technology that the world will ever see.
21:30
Ejaaz: And as a result, they're trying to bring as much of the manufacturing process
21:33
Ejaaz: and hardware process of AI onshore to the US.
21:37
Ejaaz: Now, China and Asia has had such a major head start.
21:41
Ejaaz: Taiwan is a very crucial piece of land that China could take over at any moment.
21:45
Ejaaz: It's kind of obvious why America wants to bring it onshore, but that's going to take a lot of time.
21:50
Ejaaz: And so Trump is obviously aggressively trying to form these partnerships and
21:53
Ejaaz: probably get a stock win in the meantime.
21:56
Ejaaz: I read somewhere that apparently like Trump had bought a position in Dell on
22:01
Ejaaz: his personal account before he made that public announcement,
22:04
Ejaaz: which is just absolutely insane and probably not legal.
22:08
Ejaaz: But, you know, I can kind of see like why the administration is going down that path.
22:12
Josh: Yeah, say what you will, but they're making an aggressive effort to bring this
22:16
Josh: AI trend, this AI world onto the United States soil to build everything domestically.
22:21
Josh: And what we're seeing here is like very clear signal that it's going to continue down this road.
22:25
Josh: And I think what we're seeing with Dell is a testament to what happens when
22:29
Josh: a company run by a founder really leans into the things that they've learned
22:32
Josh: over 40 years and applies that to an industry that really needs help.
22:35
Josh: We have this problem manufacturing things in the United States.
22:38
Josh: We have a very difficult time building things at scale,
22:41
Josh: creating factories that have efficient margins enough to compete with people
22:44
Josh: who are in other countries and companies that are run like ASML and TSMC and
22:48
Josh: all these other ones that are creating all the AI infrastructure.
22:51
Josh: So it's exciting to see a company like Dell really move their whole weight of
22:55
Josh: the company behind this and actually deliver some pretty compelling results.
22:58
Josh: Like they're the first ones to deploy a VeriGPU rack. That's a pretty big deal.
23:02
Josh: We started talking about Mythos and a few of the other like cutting edge models.
23:06
Josh: Uh llms and how they were just getting started training on blackwell
23:10
Josh: like we're getting our first blackwell chips and now suddenly we
23:12
Josh: have vera rubin already going into play training i'm
23:15
Josh: sure is going to begin sooner than some people would
23:18
Josh: have thought because of this accelerated timeline it's really
23:20
Josh: great to see dell is the the builder and we need more builders so i think on
23:26
Josh: like a principled basis dell's a good company for a good reason it's not just
23:30
Josh: because trump is out here saying it uh they're actually making some pretty amazing
23:33
Josh: things and i think it's it's a testament to other companies who are kind of
23:37
Josh: evaluating how to navigate this world of AI.
23:40
Josh: Being useful in the world of hardware is a really compelling value prop that
23:43
Josh: I hope more people follow.
23:45
Ejaaz: It looks like investors probably agree with this as well.
23:48
Ejaaz: Since we started recording, the stock is up 8%, roughly 30 bucks since market opened.
23:54
Ejaaz: It's literally been, what is it, under an hour of market being open.
23:57
Ejaaz: Yeah, I guess to round it out, like the question I want to ask to ask myself
24:00
Ejaaz: is, is this company in particular kind of bubble worthy?
24:05
Ejaaz: I don't have a definitive answer, but it's kind of like yes and no.
24:09
Ejaaz: Yes, because they kind of fell into this opportunity.
24:12
Ejaaz: Honestly, similar in the way that NVIDIA kind of did that, they've been building
24:15
Ejaaz: these kind of GPUs for the gaming industry and a lot of other industries prior
24:20
Ejaaz: to falling into the AI stuff.
24:21
Ejaaz: Now, credit to Jensen, obviously, he saw the trend of LLMs much early on before ChatGPT went viral.
24:28
Ejaaz: Don't think I can give the same kind of credit to Dell themselves,
24:32
Ejaaz: but they have had 40 years expertise in building these hardware racks.
24:36
Ejaaz: And what is the major bottleneck that we've covered on previous episodes,
24:40
Ejaaz: the Gavin Baker episode and the AI hardware stack episode, which you guys should
24:44
Ejaaz: definitely check out, we released them over the last two weeks,
24:46
Ejaaz: is the money is flowing from the chip maker from the consensus bet,
24:50
Ejaaz: which is Nvidia, down to all the constraints that are preventing those GPUs
24:53
Ejaaz: from actually being powered on today, electricity,
24:56
Ejaaz: chemical substrates, as well as the cooling and data center racks themselves,
25:01
Ejaaz: which is what Dell is playing in.
25:03
Ejaaz: So I think there's a huge opportunity for investors that are looking for like
25:07
Ejaaz: that kind of like next bit of exposure to kind of like work their way down the stack.
25:11
Ejaaz: Now, obviously this isn't trading or investment advice, but it's just a trend
25:14
Ejaaz: that we're noticing quite a lot of.
25:16
Josh: Yeah, and like what an amazing opportunity to be an investor,
25:18
Josh: to see all of this. There's so many companies that are undervalued,
25:21
Josh: that are misunderstood, that are kind of pivoting.
25:24
Josh: That are public. Yeah, there's so much alpha to be made in these markets.
25:27
Josh: And it's funny that the president is the one who's surfacing a lot of these,
25:30
Josh: but there actually is a tremendous opportunity for anyone who's curious in investing
25:35
Josh: or participating in the AI stack because so many of these companies that we're
25:37
Josh: seeing exploding, they've been around.
25:40
Josh: They're not that big. They're just pivoting and they're putting themselves in
25:43
Josh: the right place because they understand the business.
25:45
Josh: There's a lot of those hot, flashy, shiny companies, OpenAI,
25:47
Josh: Anthropic, Google, like the ones that we talk about every day.
25:50
Josh: But again, that AI investing stack, as you descend lower into the stack,
25:54
Josh: there's a tremendous amount of opportunities.
25:56
Josh: Dell is one of them. And as we see more people begin to pivot into the places
26:00
Josh: where there are those bottlenecks, I assume we're going to see a lot more of
26:04
Josh: these. So that's the episode.
26:06
Josh: You're caught up with a nice little teaser of the new NVIDIA hardware that was just announced today.
26:10
Josh: I think that's everything. Is there any final thoughts before we let everyone go here?
26:14
Ejaaz: I have. I always like to end the episode on a prompt. And I have one in my head right now, which is.
26:20
Ejaaz: Are you guys going out to buy the new DGX desktop for 80 grand, 80 to 100 grand?
26:26
Ejaaz: Or are you buying the RTX 4019?
26:29
Ejaaz: I'm genuinely curious, because I know that a bunch of our listenership likes
26:34
Ejaaz: to kind of be hobbyists in AI and run their own open source models.
26:38
Ejaaz: We've got a lot of feedback from you guys from previous episodes.
26:41
Ejaaz: I wonder if you guys are going to get indulged in one of these new laptops,
26:43
Ejaaz: one of these new consumer powered GPUs that you can kind of run models locally.
26:48
Ejaaz: And if you are that type of person, what are you using it for?
26:51
Ejaaz: Like, we want to learn as much as we can around the locally run AI models.
26:54
Ejaaz: We think it's going to be a huge thing in the future. So yeah, let us know.
26:56
Josh: But I love how much of a baller you think our audience is. Like,
27:00
Josh: they're just going to go drop 80k on a desktop GPU.
27:03
Ejaaz: That's how highly we think of you. Yeah, I don't know.
27:06
Josh: But I think for like the laptop, at least, as I look at the laptop,
27:09
Josh: I compare it apples to oranges.
27:11
Josh: It's compelling in the sense that I could play video games on it.
27:13
Josh: And I think that's one thing that gamers are really going to appreciate is the
27:17
Josh: fact that there is now a portable gaming machine that is really excellent at games.
27:22
Josh: Because my MacBook, I'm a diehard Apple fan. You know this. I have all Apple products.
27:26
Josh: I can't play games on that. I still got to go play on a PC or on a console.
27:29
Josh: So I think in terms of that niche audience, that's a really compelling thing.
27:32
Josh: So any gamers out there, are you buying this thing? And a 5090 in a laptop is crazy work.
27:37
Josh: I'm excited about it. I might be buying. We got to wait on the price.
27:40
Josh: If it's anywhere close to $80,000,
27:42
Josh: I will be a no, but I suspect it'll probably be in MacBook territory um but
27:45
Josh: yeah that's the episode thank you guys so much for watching if you enjoy this
27:47
Josh: don't forget to share it with your friend it really goes a long way if we've
27:50
Josh: been doing well rate us five stars on your favorite podcast player if you enjoyed
27:53
Josh: and like always we will see you guys in the next episode thank you so much for watching see you guys.