Look out, Super Micro investors, as Dell is beginning to cement itself as a significant player in artificial intelligence within the computer-server and storage market.

On Thursday, Dell Computer Inc.
DELL,
+1.51%
and its quarterly results also overshadowed one other rival, Hewlett Packard Enterprise Co.
HPE,
+2.49%,
with bullish comments about AI-related demand that the corporate is seeing. Dell said that it now expects to return to revenue growth in fiscal 2025, albeit at a low single-digit rate.

The corporate’s shares surged 19% in after-hours trading, as Chief Operating Officer Jeff Clarke and Chief Financial Officer Yvonne McGill spent much of their time on the earnings call answering analysts’ questions on the strength of AI demand and what products it’s affecting, or will affect going forward.

“Demand for the computational components to do AI exceeds the availability picture,” Clarke told analysts. “And quite frankly, it’s refreshing to see, we’ve a high-growth category here. That growth is going on actually in the general public cloud, but increasingly more so in enterprises…I believe it’s a giant opportunity for us.”

Within the fiscal fourth quarter, Dell said it shipped $800 million of AI-optimized servers, which Bernstein Research analyst Toni Sacconaghi identified remains to be lower than 5% of the corporate’s total revenue. He voiced concern in regards to the company’s projection for lower profit margins within the fiscal first quarter, due largely to the AI servers. Dell said it was as a result of product transitions within the quarter, reminiscent of adopting the brand new Nvidia Corp.
NVDA,
+1.87%
H200 chips and Advanced Micro Devices Inc.’s
AMD,
+9.06%
recent MI300X chips.

McGill also cited inflationary costs for components, and a tougher competitive environment.

Amongst Dell’s competitors is Super Micro Computer Inc.
SMCI,
+6.07%,
which has gained share within the server market previously 12 months because it has focused on the needs of data-center and hyperscaler customers for AI, and offered product differentiations in a low-margin business reminiscent of liquid cooling, a feature once only utilized in high-performance supercomputers, to chill down servers running compute-intensive graphics chips from Nvdia and others.

Also read: Super Micro’s stock price may fully reflect the AI boom.

Dell, for its part, said that liquid cooling is not going to yet be needed until customers start using Nvidia’s H200 chips, but that the power-management issue is a chance for Dell to “showcase its engineering and how briskly we are able to move,” to make liquid cooling perform at a big scale. Dell also said AI will bring opportunity to its services business, because it helps customers deploy AI, and down the road to its storage business.

Hewlett-Packard Enterprise, in contrast, saw a pointy decline in its networking business, which dragged down its stock 4% in after-hours trading Thursday. HPE also said it didn’t get enough supply of GPU chips for AI servers, which weighed on its results. It has a backlog of $3 billion in GPU orders, and its pipeline is well above that.

Even so, HPE is shrouded by a giant 14% decline in total revenue, fueled largely by its networking business, and one analyst wondered whether it was partially as a result of a customer pause ahead of its $14 billion acquisition of Juniper Networks Inc.
JNPR,
+0.54%.
HPE CEO Antonio Neri said the corporate had not lost any customers as a result of the pending Juniper deal.

Dell clearly had the more bullish call and outlook, because the AI boom starts to filter down from chips to the server hardware that they’re built into. Super Micro investors needs to be aware and begin being attentive, because Dell is clearly on its heels.