The race for dominance in the artificial intelligence (AI) market is heating up, with Dell Technologies and Amazon vying for the top spot. Both companies have seen significant growth in their AI-related businesses, but which one is the better investment option?
Dell Technologies has experienced strong growth, particularly in the AI server market. In its last reported quarter, the company’s overall revenue rose by 9% to $25 billion, with its infrastructure solutions segment witnessing a remarkable 38% increase to $11.6 billion. Notably, revenue from servers and networking surged by 80% to $7.7 billion. This growth trajectory suggests that Dell still has ample room for expansion in this product category.
Moreover, Dell is well-positioned to benefit from the missteps of one of its major competitors, Super Micro Computer. Supermicro, a prominent player in the high-performance server market, has faced setbacks due to accounting issues and a subsequent decline in its stock price. Reports indicate that Nvidia, whose GPUs were crucial components in Supermicro’s advanced servers, has started redirecting orders away from Super Micro Computer. This presents an opportunity for Dell to capture a significant market share and potentially emerge as the leader in the high-performance server market.
On the other hand, Amazon, known primarily for its e-commerce business, has also made significant strides in the AI sector. Its cloud computing segment, Amazon Web Services (AWS), is a dominant player in the market. Amazon has leveraged its expertise in hardware development to create a major AI business focused on AWS and generative AI. By working with Nvidia’s GPUs, Amazon offers competitive generative AI services for AWS clients.
Amazon’s AI business has already achieved a multibillion-dollar annual run rate, according to CEO Andy Jassy. The company’s AI services cater to a wide range of needs, from developers coding their own large language models (LLMs) to smaller businesses seeking budget options. The convergence of digital solutions, AI, and hardware has allowed Amazon to expand its offerings and attract clients from various industries.
Furthermore, the excitement and opportunities presented by generative AI have contributed to an overall uptick in Amazon’s cloud business. Despite some companies curtailing spending due to inflation, they recognize the necessity of being on the cloud to participate in the generative AI revolution. As a result, more companies are switching to AWS services, leading to a 19% year-over-year increase in AWS revenue in the third quarter.
