Episode 230, this episode aired on September 03, 2024
Analyst(s): Daniel Newman, Patrick Moorhead
Document #: SF230DNPM202409
As the technology landscape continues to evolve rapidly, primarily driven by artificial intelligence (AI), companies like NVIDIA, VMware, Salesforce, Dell, Pure Storage, and HP Inc. have reported earnings highlighting significant industry shifts. This analysis breaks down the latest earnings reports from these firms, drawing connections between company performance, market trends, and technological innovation, all critical for industry professionals, investors, and stakeholders.
What Are Covered in This Episode:
- NVIDIA Q2 FY25 Earnings: AI Propels Growth to Unprecedented Levels
- VMware Explore 2024: Private Cloud and AI Evolution
- Salesforce Q2 FY25 Earnings: Steady Growth with an Eye on AI
- Dell Q2 FY25 Earnings: The AI Hardware Boom
- Pure Storage and HP Inc. Focus on AI-Driven Strategies
- HP Inc Q3 FY24 Earnings: AI PC Rollout and Printing Struggles
Access the video link of the September 03, 2024 Six Five episode here.
NVIDIA Q2 FY25 Earnings: AI Propels Growth to Unprecedented Levels
NVIDIA’s Q2 FY25 earnings demonstrated its meteoric rise as a critical enabler in the AI revolution. The company posted revenues far exceeding expectations, with $32.5 billion projected, though some analysts speculate this number may reach $34 billion. The surge in demand for NVIDIA’s graphics processing units (GPUs), foundational to AI and machine learning workloads, is mainly responsible for this performance. Jensen Huang, the company’s CEO, has been labeled the “godfather of AI” for a good reason—NVIDIA has managed to position itself as the cornerstone of AI hardware, providing the computing power needed for tasks such as AI model training, data center operations, and edge computing.
The heart of NVIDIA’s success lies in its data center division, which saw explosive growth due to its role in AI and machine learning. AI requires immense computational resources, and NVIDIA’s GPUs are ideally suited for this task. Beyond gaming and traditional graphics applications, NVIDIA’s hardware is now the backbone of many enterprise AI applications, including those in healthcare, autonomous driving, and financial services. This shift reflects a broader industry trend where enterprises are moving from experimentation with AI to full-scale deployment.
NVIDIA’s recent success, however, is not solely attributed to hardware. The company has also been expanding its software capabilities through its CUDA programming model, simplifying AI application development. Additionally, NVIDIA is making strides in AI software libraries and AI cloud services, ensuring that its ecosystem is not just limited to high-performance hardware but spans an end-to-end solution for enterprise AI adoption.
Broader market trends also point to the continued rise of AI as a transformative force across industries. The need for advanced infrastructure fuels massive investments in AI and related technologies, creating opportunities for companies across the semiconductor supply chain and beyond. What’s clear is that NVIDIA is a driving force in the global AI expansion, and its growth will likely have long-lasting ripple effects across the technology landscape.
VMware Explore 2024: Private Cloud and AI Evolution
VMware’s 2024 Explore event underscored the company’s focus on the private cloud and AI’s increasing role in enterprise IT infrastructure. VMware Cloud Foundation (VCF) 9.0 was the highlight, with this latest release being the culmination of years of development in hybrid cloud solutions. VCF aims to provide enterprises with the flexibility of public cloud infrastructure while maintaining the control and security of private, on-premise environments. The latest iteration of VCF includes advancements that bring AI into the private cloud, mainly through private AI services.
AI workloads are traditionally compute-intensive, and many organizations are hesitant to move these workloads fully into the public cloud due to concerns over cost and data security. VMware addresses this by virtualizing GPUs, ensuring these expensive resources are utilized efficiently. This represents a significant step forward in integrating AI into private cloud environments, allowing enterprises to run sophisticated AI applications on their terms.
A critical part of VMware’s strategy is its ability to virtualize various IT stack elements— from CPU and storage to networking (through NSX) and GPUs. Virtualizing GPUs is particularly significant because AI applications rely heavily on these processors, and inefficient use of GPU resources can lead to higher costs and slower performance. VMware’s technology optimizes GPU use, ensuring that AI workloads run smoothly and cost-effectively. This has broader implications, as more enterprises are expected to adopt AI technologies for automation, analytics, and business intelligence, requiring flexible and scalable infrastructures like VCF.
With VMware’s leadership in cloud management, the company’s strategic direction positions it as a key player in helping enterprises move toward hybrid models where AI can be deployed seamlessly across both on-premise and public cloud environments. As AI penetrates industries, this flexibility will be increasingly valuable for organizations looking to balance cost, performance, and security.
Salesforce Q2 FY25 Earnings: Steady Growth with an Eye on AI
Salesforce continues progressing in its AI journey, posting strong Q2 FY25 earnings and showcasing its expanding suite of AI-enabled tools, mainly its focus on Agentic AI. Salesforce has been an early mover in incorporating AI into its customer relationship management (CRM) offerings. Still, its focus now is on creating intelligent agents that enhance user engagement and productivity through automation.
Salesforce’s “Data Cloud” is emerging as a central component of its AI strategy. This platform allows customers to unify their data across various systems, a crucial step in enabling AI-driven analytics and decision-making. Data Cloud also plays a vital role in powering AI models, as the quality and quantity of data significantly affect AI performance. With AI’s increasing role in Salesforce’s portfolio, integrating AI into existing products will drive further growth.
Despite the focus on AI, Salesforce’s growth rate has been slightly modest compared to expectations, primarily due to challenges translating AI enthusiasm into measurable revenue impact. While Benioff has been vocal about AI’s transformative potential, the practical financial outcomes of AI-powered Salesforce features remain to be fully realized. The company’s revenue from AI-related features, such as predictive analytics and machine learning-driven recommendations, will likely grow as more customers integrate AI tools into their operations.
As more companies explore AI-driven customer engagement, Salesforce’s Agentic AI and Data Cloud are well-positioned to capture additional market share. The challenge, however, will be in ensuring that customers see tangible ROI from their AI investments—whether in improved customer service, more efficient sales processes, or better overall business intelligence. For Salesforce, the goal is to turn its early AI advancements into a significant growth engine over the next few years.
Dell Q2 FY25 Earnings: The AI Hardware Boom
Dell’s Q2 FY25 earnings revealed a substantial surge in its Infrastructure Solutions Group (ISG), which grew by 38%, propelled by an 80% jump in AI server sales. Dell’s success is rooted in its strategy to target two key customer segments: tier-two cloud service providers (CSPs) and enterprises just beginning to deploy AI workloads. Dell’s offerings are beautiful to these customers because of its ability to bundle AI servers with complementary networking and storage solutions, creating a comprehensive infrastructure package.
One of the most notable takeaways from Dell’s earnings call was the discussion about its AI backlog and pipeline. The company reported a backlog of over $3 billion in AI server orders, indicating that the demand for AI infrastructure is far from saturated. As more enterprises move beyond the experimental phase of AI and begin scaling their deployments, Dell is well-positioned to benefit.
Dell’s AI strategy is not just about hardware. The company has provided comprehensive solutions, including services, software, and infrastructure management. AI servers, while critical, are just one part of the AI stack. Dell’s value proposition extends to helping enterprises manage the complexity of AI infrastructure, particularly in networking, power management, and storage optimization. The company’s focus on AI as a service (AIaaS) and its partnerships with key players in the AI ecosystem (such as VMware and NVIDIA) further strengthen its position as a leader in enterprise AI infrastructure.
What’s particularly interesting about Dell’s approach is its focus on tier-two CSPs, smaller cloud providers that may not have the same capital resources as giants like Amazon or Microsoft. These tier-two providers are increasingly looking to deploy AI infrastructure to serve niche markets, and Dell’s scalable, customizable solutions make it an ideal partner.
Pure Storage Q2 FY25 Earnings: AI-Efficient Storage Solutions
Pure Storage reported Q2 FY25 results that were mixed, with a slight revenue miss but notable growth in subscription-based services. Pure Storage’s strength lies in its ability to deliver AI-optimized storage solutions that focus on power efficiency, an increasingly critical factor as AI workloads grow in size and complexity.
The demand for power-efficient storage is exceptionally high in AI environments, where the massive datasets used for training machine learning models can quickly become overwhelming. Pure Storage has positioned itself as a leader in reducing power consumption while maintaining high performance, making it an attractive option for enterprises looking to cut costs and increase efficiency.
The company’s Evergreen//One subscription model is a significant growth area, offering customers a flexible, scalable storage solution that can be adapted as their AI and data storage needs evolve. Although Pure Storage pulled back its TCV estimates for SaaS growth, citing longer deal cycles, it remains well-positioned to capitalize on the rising demand for AI infrastructure.
Pure Storage is also pursuing cloud-native storage solutions, a growing segment as enterprises move workloads to hybrid environments. The company’s focus on reducing customers’ total cost of ownership (TCO) while improving power efficiency positions it as a strong contender in the AI storage market. As the AI landscape evolves, Pure Storage’s ability to offer cost-effective, scalable storage solutions will be a crucial differentiator.
HP Inc Q3 FY24 Earnings: AI PC Rollout and Printing Struggles
HP Inc’s Q3 FY24 earnings marked a return to revenue growth after nine consecutive quarters of declines, driven largely by a 6% increase in commercial PC unit sales. The company’s focus on AI-powered PCs, which it expects to comprise over 10% of its revenue in the second half of FY24, is a clear signal of where the future of the PC market is heading.
AI PCs are designed to directly integrate machine learning and AI functionalities into the hardware, allowing for enhanced performance, especially in tasks like image processing, predictive analytics, and data management. HP expects AI PCs to drive significant growth in the coming years, particularly as enterprises upgrade their fleets to handle more data-intensive applications. By 2027, HP predicts that AI PCs will account for 50% of its product mix.
Despite this optimism, HP continues to face challenges in its printing segment, particularly in commercial printing, which saw a 5% decline. The Chinese market has proven particularly difficult due to aggressive pricing competition. However, HP expects improved printing business through cost-cutting measures and stronger revenue in the next quarter.
One of HP’s key initiatives is leveraging its strong position in the commercial PC market to drive AI adoption. The company believes the shift from Windows 10 to Windows 11 in 2025 will drive a new wave of PC purchases as enterprises upgrade their systems to take advantage of AI capabilities embedded in the latest OS. This transition, combined with the growing demand for AI PCs, puts HP in a favorable position to capitalize on the next phase of enterprise technology upgrades.
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Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other insights from The Futurum Group:
NVIDIA Q2FY25 Earnings with Special Guest Dan Ives
Salesforce Q2 FY25 Financials Exceed Expectations
Dell Q2 FY 2025 Earnings Deliver Record Server and Networking Revenues
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
Six Five Media is a joint venture of two top-ranked analyst firms, The Futurum Group and Moor Insights & Strategy. Six Five provides high-quality, insightful, and credible analyses of the tech landscape in video format. Our team of analysts sit with the world’s most respected leaders and professionals to discuss all things technology with a focus on digital transformation and innovation.
