Good morning. Dell Technologies is having a year of milestones with its 40th anniversary, a return to the S&P 500 index, and tremendous momentum in the AI server business.
S&P Dow Jones Indices announced on Sept. 6 that the tech giant would rejoin the S&P 500—a stock market index that comprises 500 publicly traded, U.S.-based companies with high market capitalization—effective prior to the open of trading on Sept. 23.
“There was super excitement from Michael all the way down,” Yvonne McGill, EVP and CFO at Dell told me. Companies aren’t notified in advance when they’ve received approval for inclusion in the index, but Michael Dell, the company’s founder and CEO, was the first one to see the announcement when it was released and spread the news, McGill said.
“My team started working on a ‘we got added to the S&P 500’ note, and Michael beat us to it; he’s very engaged, and very fast,” she said. The tech giant was previously included in the S&P 500 before it went private in 2013. Dell resumed trading on the New York Stock Exchange in 2018.
“I think we are a remarkable example of a successful U.S.-based, multinational company that should be included in the S&P 500,” McGill said.
Dell, a Fortune 500 company, returns to the index following an over 75% gain in the stock over the past 12 months. The company has delivered $24 billion in adjusted free cash flow over the past five years, McGill said. After Dell completed the spin-off of VMWare in 2021, it had to work to get back to investment-grade ratings, she said. This time last year, Dell said it would return 80-plus percent of its adjusted free cash flow to shareholders, and “we’ve done that and more,” she said. It has returned over $9 billion to shareholders.
Dell’s evolution
McGill began her role as CFO in August 2023, but she joined Dell in 1997. I asked her thoughts on the direction of the company that was founded in 1984.
“We’re not the company we were 40 years ago,” she said. “I’m proud of how we continue to evolve.”
McGill said she is excited about the core business—designing, developing, and selling PCs—as well as AI and that “extra opportunity that drives for us.” For example, Dell’s AI-enabled server PowerEdge 9680, has accelerated development, with the second generation taking nine months instead of three years to develop, she said. PowerEdge 9680 is the company’s fastest-growing solution, and quickest to reach $1 billion.
Over the past year, Dell has sold over $6 billion in AI servers. In the company’s Q2, AI orders were $3.2 billion up 23% from the prior quarter. And AI shipments were $3.1 billion, up over 80% quarter to quarter.
“We’ve really only been in this AI server business for about a year now, so I’m excited for next year because I’ll start building more history,” McGill said.
Dell is also using AI internally in finance and accounting, like auto reconciling. And in customer service, the company is auto-resolving 80% or more of the issues that are coming in. Customer satisfaction rates are at about 85%, McGill said.
Looking ahead toward 2025, Dell is focused on continued growth in its core business with the PC refresh cycles, enterprise AI adoption, and reaching new heights with the AI server business, McGill said.
“We’re doing things differently, and we will continue to evolve and grow and learn,” she said. Adding, “We’re not 100% perfect, but we are doing very well.”
Sheryl Estrada
sheryl.estrada@fortune.com
The following sections of CFO Daily were curated by Greg McKenna
Leaderboard
Taylor Luebke was promoted to SVP and CFO of furniture company La-Z-Boy (NYSE: LZB), effective Jan. 1. He will succeed Bob Lucian, who has served as the company’s CFO since 2021 and is retiring after almost 35 years in finance. He will remain at the company until late April to support a smooth transition. Luebke joined the company in 2021 and currently serves as VP of finance and as the company’s treasurer. He’s held senior finance roles at several consumer product companies, including multiple stints at Procter & Gamble.
Vincent Paul “V.P.” Berger II was promoted to EVP and CFO of HNI Corporation (NYSE: HNI), a manufacturer of workplace furnishings and residential building products, effective Dec. 29. He will succeed Marshall H. Bridges, who is retiring after over 23 years at the company but will continue in a part-time role assisting strategic projects related to artificial intelligence. Berger has worked at HNI for 27 years, most recently serving as EVP and president of subsidiary Hearth and Home Technologies since 2016.
Big Deal
Finance chiefs largely still anticipate growth over the next year despite a severe decline in confidence, according to Grant Thornton’s quarterly CFO survey. Out of 230 respondents, 79% said they expected growth in net profit over the next 12 months, the highest mark in 10 quarters.
Only 51% said they were confident about meeting increased demand, however, a 12-point drop from the survey last quarter. One source of short-term volatility is the election, with 61% of those polled saying it’s possible the results in November will lead to a change in business strategy.
Regardless, finance chiefs are intent on keeping pace with technological change. Nearly two-thirds (66%) of those surveyed expected to increase their spending on IT and digital transformation in the next year, a 15-quarter high. Sixty percent of CFOs said their companies are using Gen AI to manage customer relations, with 58% utilizing AI for product and service development, up from 45% and 35% in Q1, respectively.
Going deeper
How Companies Can Use LLM-Powered Search to Create Value is a new article from the Harvard Business Review. Web browsers have already started using AI to generate summaries and overviews, and businesses are looking to embed that experience into their own systems. Ege Gürdeniz, Ilana Golbin Blumenfeld, and Jacob T. Wilson from PwC spell out six tactics for organizations to effectively leverage this capability while also managing risks such as hallucinations, data privacy, and biased retrieval.
Overheard
“To fix our broken health care systems, we can’t rely on the status quo. Progress requires stepping outside the norm—and building trust in AI as a vital tool to overcome these challenges.”
— Lars Maaløe, cofounder and CTO of Danish medical software company Corti, wrote in a Fortune opinion piece titled, “AI could be the drunk uncle in health care—or fix our broken systems.”
