In 2013, as Michael Dell battled Carl Icahn to take his company private, we asked in the New York Times how a founder could “keep the revolution forever young.” Last week, Dell offered a fresh answer.
Four years ago, while many treated AI as a novelty or warned of its dangers, Dell began treating AI as a durable pillar of the economy. That shift culminated in what may be the roughly 12th strategic reinvention of the company Michael Dell founded in 1984 as a 19‑year‑old in his college dorm room.
Last week, Dell Technologies delivered one of the most lopsided beats of this earnings season. Revenue of $47 billion rose 58%, and adjusted earnings of $7.04 per share crushed expectations of roughly $4.90. The company booked a record $60.9 billion of AI server orders in a single quarter, exited with a record $95 billion backlog, and raised its full‑year outlook by $25 billion to $192 billion, roughly 70% year‑over‑year growth.
Critics long dismissed Dell as a legacy PC assembler rather than an AI innovator. That narrative is now untenable. Dell is positioned to be one of the biggest winners as the provider of the infrastructure on which the AI build‑out physically runs.
Dell sits at the center of the data‑center wave as the world’s largest server maker, assembling the compute, storage, and networking that hyperscalers and enterprises are buying as fast as it can ship them. What skeptics missed is that Dell’s role spans how firms deploy AI—from public‑cloud and co‑location facilities that anchor large‑scale training to hybrid configurations that let companies keep critical workloads close to home.
Crucially, Dell is poised to ride a new secular growth wave: the shift of enterprise AI spending to on‑premise deployments and the company’s unusually integrated position across IT segments.
What does “on‑premise” mean and why does it matter? Simply put, companies are moving AI away from rented computers in hyperscaler data centers—Amazon, Microsoft, and Google—and onto machines they buy, control, and keep in their own facilities: closer to their data, under their own security, and behind stricter guardrails. That shift positions Dell as a major beneficiary in the months and years ahead.
Despite the prominence of cloud computing, the majority of mission‑critical data still resides on premises. As Amazon CEO Andy Jassy said on his company’s last earnings call: “Remember, by the way, that 85% of the global IT spend is still on premises.” Data is now being created faster in the real world than in the cloud, and companies are realizing they want to bring AI to the data rather than move data to external AI resources—especially for physical AI use cases such as robotics and advanced manufacturing.
Companies are bringing AI home for three plain reasons. First, the most sensitive enterprise data—files, contracts, telemetry and patient charts—generally already sit on private servers companies own, not in a public hyperscaler cloud. It is often cheaper, faster, and safer to bring AI agents to the data than to move data to remote compute. Second, on‑premise AI gives firms greater control; banks, hospitals, defense contractors and governments resist letting sensitive data leave their buildings or countries. As Michael Dell put it in May: “The risk is losing control of your data, your cost, your security, your intellectual property and your speed.” Third, cost: training a model can be rented for bursts, but running AI agents continually is expensive to rent; owning and operating on‑premise infrastructure becomes more economical as agents proliferate.
AI agents also drive exponential demand: they run continuously, creating more data to store and secure. That creates a virtuous flywheel where increased AI use generates more demand for servers and storage, and vice versa. Dell now counts more than 6,500 AI enterprise customers—3,300 added in the last three quarters—and its pipeline grew even after $131.7 billion of orders. Traditional servers grew 122% and storage grew 26%.
That demand is also lifting margins. Infrastructure operating margin expanded 620 basis points to 15%, which Morgan Stanley called “unprecedented.” The gain reflects Dell’s integrated portfolio—AI servers, storage, networking, PCs and services—and its scale in component purchasing, a critical advantage during a year of memory shortages.
None of this was accidental. Many of Dell’s early competitors failed when they missed seismic shifts: Wang Labs went bankrupt; Control Data was broken up; Sun Microsystems was sold to Oracle after peaking at $18.3 billion; Compaq was swallowed by Hewlett‑Packard; Digital Equipment declined; and Data General was bought by EMC in 1999. Dell, by contrast, built an integrated generalist and maintained governance control that allowed it to transform across eras—partly enabled by its dual‑class share structure. In some cases Dell ended up owning the companies that once dwarfed it.
Michael Dell emphasized the company’s scale in storage and servers: “Dell Technologies leads not only in servers but also in data storage (the EMC acquisition was exactly 10 years ago). After all, data is the fuel for AI. Bad data, bad AI. No data, no AI….In data storage and servers we’re bigger than #2, #3 and #4 combined. We happily maintain a lower gross margin percent, delivering enduring value to our customers and shareholders through a far lower cost structure and massive scale advantages that grow every day.”
The company’s successes also vindicate Michael Dell’s long‑running strategic choices, including prevailing over activist investor Carl Icahn in 2013 when Icahn pushed to break the company apart. Dell’s big moves—most notably the $67 billion acquisition of EMC, the largest technology buyout in history—were bets that enterprises would want to own infrastructure rather than rent it. That prescience looks prescient today amid the shift of enterprise AI spending toward on‑premise deployments.
The markets have largely missed this shift of enterprise AI spending toward on‑premise—just as they misread the earlier “SaaSpocalypse.” The test separating AI winners from losers, we argued previously, is whether a company owns something AI cannot operate without. For Salesforce that asset is trusted proprietary data; for Dell it is becoming the AI server provider of choice for the on‑premise build‑out.
Thirty‑two years ago we awarded the then‑29‑year‑old Michael Dell our Legend in Leadership award. Today his steady, results‑focused approach looks vindicated: he rarely seeks attention, does not rely on preannounce vaporware tactics, and repeatedly delivers strategic outcomes. As Mark Twain observed, “Action speaks louder than words, but not nearly as often.”
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune. Research was contributed by Frankie Reichman.
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