In a recent report, Dell emerged as a frontrunner in the AI server market, leaving its rival Super Micro Computer struggling to maintain its exclusivity. Hindenburg Research, an activist short-seller, revealed that companies like Tesla and Nvidia are increasingly turning to Dell for their server needs.

Tesla, which had exclusively sourced its servers from Super Micro, has now shifted major deals to Dell, as indicated by recent reports and posts from Elon Musk in May 2024. This move has eroded Super Micro's dominance in the market, according to Hindenburg Research. In addition, Nvidia CEO Jensen Huang endorsed Dell, citing their expertise in building comprehensive systems for large-scale enterprises.

Dell's founder and CEO, Michael Dell, surprised the industry by announcing a partnership with Nvidia to establish a Dell AI factory. The factory will power Elon Musk's xAI and assemble half of the racks for xAI's supercomputer, with Super Micro being the other partner. This collaboration underscores Dell's commitment to AI and positions them at the forefront of the AI server market.

Against the backdrop of negative concerns surrounding Supermicro, Evercore ISI predicts that Dell will gain substantial market share. The competitive landscape in AI servers is crucial, with analysts urging investors to consider Dell's strong presence.

Dell's Q1 earnings in 2025 exceeded analysts' estimates. However, the market responded with disappointment, causing share prices to tumble by 17%. The company earned $1.27 per share adjusted, a 3% decline, but slightly above projections. Meanwhile, revenue reached $22.2 billion, surpassing the forecast of $21.6 billion. Dell's Infrastructure Solutions Group saw a 22% increase in sales, driven by the high demand for AI servers. However, concerns persist regarding the near-zero margins at which AI servers may be sold.

Looking ahead, Dell forecasts Q2 revenue between $23.5 billion and $24.5 billion, with an adjusted EPS of $1.65. The company is set to report Q2 earnings on August 29, shedding further light on its performance.

Industry analysts express varying opinions on Dell's prospects. Citi analyst Asiya Merchant lowers the price target to $155 from $170 but maintains a buy rating due to Dell's focus on margins and AI growth. Evercore ISI predicts that Dell's AI server revenues will exceed $8 billion this year and likely reach $10 billion next year. JPMorgan raises Dell's price target to $160 from $155 and adds it to the firm's Analyst Focus List as a value pick.

As Dell continues to capitalize on the surge in demand for AI-focused servers, its relentless pursuit of AI opportunities places the company at the forefront of technological innovation. The AI server market remains in its early stages, and Dell stands poised to dominate and thrive in this evolving landscape.