Dell embodied 2 of the corporate world's biggest themes in 2024: AI and RTO. It's paying off.

• In 2024, companies were seizing the AI opportunity and calling workers back to the office.
• Few big businesses embodied those trends more than PC maker and cloud storage provider Dell.
• BI spoke to the company and analysts about some of Dell's biggest developments over the year.

Dell made its name in the 1990s as the trusty brand for office PCs.

It has since evolved into a major server vendor and data storage provider, but outside tech circles, the company has mostly retained its original reputation.

In the last year, Dell's 40th as a business, it's become clear that another transformation is underway at the Texas-based company, one that positions it as a key player in the AI game.

The company has also embodied another major business trend of the year — the RTO movement.

Business Insider spoke to the company and tech analysts about some of Dell's biggest developments over the year.

Dell's AI transformation

Adopting AI has been at the forefront of most business strategies this year, Dell included.

The company rolled out AI across its internal operating model in the summer. It has also made it its mission to help all enterprises do the same.

"Our purpose really is to accelerate the adoption of AI by our customer," Vivek Mohindra, Dell's senior vice president of corporate strategy, told BI.

Bob O'Donnell, president and chief analyst at Technalysis Research, said Dell has been "aggressive" in bringing all the infrastructure and services needed for AI adoption to market.

Dell's product suite, which it refers to as the Dell AI Factory, now includes AI PCs, GPU-enabled servers, storage offerings, networking solutions, and advisory services.

Mohindra said Dell's lineup of PowerEdge servers has doubled this year from five to 10; six are air-cooled, and four are direct liquid-cooled.

They are exactly the kind of energy-efficient, high-density systems that companies require to run their own models on-premises. If Dell's servers can power heavy AI workloads, then its data and cloud-based offering can help streamline and scale data workflows.

The nuanced offering has helped Dell capture the market of very large customers or "tier-2 CSPs."

Think the likes of Morgan Stanley, Bank of America, Pfizer, or Vultr, explained Patrick Moorhead, CEO and chief analyst at Moor Insights & Strategy.

Moorhead, who has been following Dell for 14 years, said the company had done even better than he expected this year. It is taking advantage of the surge in companies wanting to run their own models and store data on-premises. It has succeeded in optimizing its offering by adding deployment services on top of great engineering, he added.

"It's a clever strategy and it's something that I didn't necessarily expect to see so much success so quickly," said Moorhead. "They're pulling it all together and making it a reality for enterprises."

Dell is also partnering with Silicon Valley's biggest names. It already works closely with Nvidia, Qualcomm, and Intel. In June, it announced that it was providing hardware to power the supercomputer being built by Elon Musk's company, xAI.

In November, Dell and Meta joined forces to provide on-premises AI infrastructure using Llama 2 AI models and Dell hardware.

These partnerships show how much Dell is extending its reach and make a statement that there is opportunity at the company, said O'Donnell.

"The fact that they're able to meet the requirements and demands of somebody like a Meta is a great sign."

The success of this AI strategy was evident in Dell's most recent quarterly earnings.

Revenue from the Infrastructure Solutions Group (ISG) — which includes AI servers, storage, and other network capabilities — jumped to a record $11.4 billion for the third quarter, a 34% increase on the previous year.

Specifically, servers and networking revenue was up 58% year over year. The company's shares have now soared from below $34 in September 2022 to around $117 in late December 2024, giving it a market capitalization of around $82 billion.

Nobody out there is indestructible, said Moorhead, but Dell's broad offering, strong supply chain, and scalability have set it up for continued success.

"They're one of the few companies in the world that sells all of those pieces. So I think they've positioned themselves pretty well," he said.

Mohindra is just as positive: "As I tell my teams, buckle up because next year, the change is going to be even more accelerated than this year."

RTO

As it rolled out products for the AI future, Dell was also making some big internal changes.

In August, the company implemented a major restructuring of business operations, including a round of layoffs. Dell also pushed a steady RTO policy throughout the year, which was connected to AI.

"As we enter a new AI world, in-person human interaction will be more important than ever," an internal memo sent by executives in September stated.

The policy blocked some workers from promotions and saw workers tracked for their attendance. For more than a decade, Dell had allowed some staff to work remotely leaving many of its employees frustrated by the changes.

BI obtained data on the workforce that showed close to 50% of Dell's full-time workers in the US opted to stay remote.

In September, another RTO policy called sales staff back to the office full time. "It became clear to us that there are huge benefits for sales to be together in terms of learning from each other, training, and mentorship," Mohindra told BI.

Several employees told BI that they had heard unofficially from managers that the five-day order would be extended to other departments in 2025. When asked if that was true, Mohindra said Dell is "a continuously learning organization."

Dell was more vocal than most of its competitors about RTO, said O'Donnell and Moorhead, but both analysts did not believe it would have a major impact on the company.

"It doesn't seem like their policies are radically different than what a fair number of tech companies are starting to do," said O'Donnell. "It's not like I think Dell's going to lose a whole bunch of people to HP or Lenovo."

"I think it will be a good thing for growth," said Moorhead, "especially product development."