Dell Technologies Inc. is forming a new sales team dedicated to artificial intelligence (AI) products and services as part of a major reorganisation of its sales teams.
TakeAway Points:
- Dell is reorganizing its sales staff, focusing on AI-related products and services, in an effort to improve growth and optimise processes.
- Dell’s shares have risen 34% this year despite a previous 40% drop from a record high; the company cut 13,000 jobs earlier in 2023.
- Due to design issues, Nvidia is facing delays in the release of its new AI processors, which might affect short-term earnings but also present possibilities for purchases.
Dell’s Restructuring and Layoffs
This restructuring effort is part of a broader strategy to streamline operations and prioritize investments in high-growth areas. “We are getting leaner,” wrote sales executives Bill Scannell and John Byrne in a memo to Dell employees.
“We’re streamlining layers of management and reprioritizing where we invest.”
The Texas-based hardware technology company has seen renewed investor interest over the past year, largely due to its high-powered servers capable of running AI workloads. However, there is growing concern about the time it will take for companies to see returns on their AI investments, which often require expensive servers or graphics processing units. A spokesperson for Dell declined to comment on the number of jobs affected by the reorganization but stated, “Through a reorganization of our go-to-market teams and an ongoing series of actions, we are becoming a leaner company.”
Dell’s shares have increased by 34% this year through Friday’s close, although the stock had lost more than 40% of its value since reaching a record high of $179.21 on May 29. The company had previously announced a major workforce reduction in early 2023, shedding 13,000 jobs. As of February, Dell had about 120,000 full-time employees globally, according to a regulatory filing.
AI and Marketing Plan
Dell’s reorganization includes a new focus on AI-optimized products, which the company believes will drive future growth.
“We aim to grow faster than the market by seamlessly meeting our customers and partners online, virtually, or in person to unlock the value of modern IT and AI for their organizations,” the executives wrote in their memo.
This shift comes as the company’s traditional business of selling personal computers has struggled amid a post-pandemic decline in the market. However, computer industry shipments have begun to pick up, and Dell is optimistic that a new generation of AI-optimized PCs will fuel upgrades.
The company is also changing its approach to data center sales, another area where it sees significant growth potential. The reorganization aims to better align Dell’s sales strategy with the evolving needs of its customers, particularly in the AI and data center markets.
Nvidia’s AI Chip Delay
In related news, Nvidia shares fell by 9.5% in premarket trading following a report that the company’s upcoming artificial intelligence chips will be delayed due to design flaws. Analysts believe this could have a short-term revenue impact, although it may be mitigated by continued demand for other Nvidia products. “A delay would potentially limit upside beats to 2H sales estimates,” according to Bloomberg Intelligence, although “it’s too early to say if this would lead to a miss.”
Citi has lowered its FY25 estimates for Nvidia and removed a 30-day upside catalyst watch on the stock.
“We view Jul/Oct-Q data center sales as largely intact and estimate ~15% impact to Jan-Q data center sales on lower Blackwell, offset partially by higher H200 demand with Apr-Q sales to move higher on the Blackwell push out,” Citi analysts noted.
D.A. Davidson described the delays as “likely to be short-lived and have limited impact,” but acknowledged they add a twist to Nvidia’s story.
Bernstein analysts stated that while potential delays are never ideal, they are not panicking yet. “It remains clear that demand levels continue to rise,” they said. Melius Research added that the issue with Blackwell could impact Nvidia’s third and fourth quarters but noted that sales of Hopper chips H100 and H200 are still strong. “Concerns about this issue could get overblown,” Melius Research stated, suggesting the delay could create a buying opportunity.
