How Nvidia’s AI surge fuels growth for partners like Dell?

Nvidia’s AI technology has helped companies like Dell, Hewlett Packard Enterprise (HPE), and Super Micro boost their sales. However, these server makers are facing lower profits and losing some control over customers.

Dell recently secured a $5 billion deal to supply AI servers to Elon Musk’s xAI, but the profit margins are thin—only in the mid-single digits. Nvidia, as the leading AI chip supplier, holds significant power and influences how its technology is used, often limiting the ability of partners like Dell to sell additional products.

To make matters worse, Nvidia has expanded beyond just chips, offering networking and AI servers that compete with Dell and HPE. This reduces the opportunities for server makers to bundle higher-margin products.

Dell, HPE, and Super Micro are trying to adapt, with Dell shipping over $10 billion worth of AI servers and Super Micro expecting a 62% jump in sales. Meanwhile, HPE is gaining ground with a recent $1 billion deal with Musk’s social media platform, X.

The future of these server makers depends on whether competitors like AMD and Intel can challenge Nvidia’s dominance. Until then, Nvidia’s influence over the AI market remains strong.