Dell Technologies Inc.

Digital transformation and innovation · Technology obsolescence and evolution

We operate in an industry in which there are rapid technological advances in hardware, software, and services offerings, including AI, cloud, and security-related offerings. Our ability to respond to such advances and to develop new or improved offerings is critical to our continued success.

Cybersecurity and data protection · Third party data security and vendors

In some cases, these incidents, which are common in our industry for companies of our size, have resulted in successful attacks on our IT environments. We have experienced cyber-attacks that leveraged compromised credentials of our partners, vendors, employees, and customers to gain unauthorized access to Dell Technologies, partner, and vendor systems and confidential information.

Cybersecurity and data protection · Insider threats and access controls

Threat actors, including nation states and state-sponsored organizations, pose a significant risk of penetrating or bypassing our security defenses, including by utilizing insider threat tactics, deploying AI tools against our defenses, breaching our information technology systems, and misappropriating or compromising confidential and proprietary information.

Industry regulation · Safety and environmental regulations

Our compliance with current or future environmental and safety laws could have an adverse effect on our business. Our operations are subject to environmental and safety regulations in all areas in which we conduct business. Product design and procurement operations must comply with new and future requirements relating to climate change laws and regulations, materials composition, sourcing, energy efficiency and collection, recycling, treatment, transportation, and disposal of electronics products.

Tax and financial reporting · Tax compliance and changes in tax law

Adverse legislative or regulatory tax changes, the expiration of tax holidays or favorable tax rate structures, or unfavorable outcomes in tax audits and other tax compliance matters could result in an increase in our tax expense or our effective income tax rate. Changes in tax laws could adversely affect our operations and profitability.

Industry regulation · Regulatory compliance and changes

AI is the subject of evolving review by various domestic and international governmental and regulatory agencies, and laws, rules, directives and regulations governing the use of AI are rapidly proliferating and evolving. We may not always be able to anticipate how to respond to these legal frameworks for AI use.

Legal and litigation · Intellectual property disputes

In addition, our business, operating results, and financial condition could be adversely affected if any infringement or other intellectual property claim made against us by any third party is successful, resulting in damages being assessed and injunctions granted.

Tax and financial reporting · Transfer pricing and international tax

The Organisation for Economic Co-operation and Development (the 'OECD') is continuing discussions regarding fundamental changes in the allocation of profits among tax jurisdictions in which companies do business, as well as the implementation of a global minimum tax, referred to as the 'Pillar One' and 'Pillar Two' proposals.

Industry regulation · Capital and liquidity requirements

Weak economic conditions, changing customer mix, and additional regulation could harm our financial services activities. Our financial services activities, conducted primarily through Dell Financial Services, can be negatively affected by adverse economic conditions that contribute to loan delinquencies and defaults.

Human capital and workforce · Talent acquisition and retention

We are highly dependent on the services of Michael S. Dell, our Chief Executive Officer, and our loss of, or our inability to continue to attract, retain, and motivate, executive talent and other employees in this highly competitive market could harm our business. We face intensive competition, both within and outside of our industry, in retaining and hiring individuals with the requisite expertise.

Core operations · Quality control and product defects

We may receive defective parts and products from vendors, which could require the replacement of such parts and products and expose us to reputational harm.

Core operations · Operational disruption and business continuity

Portions of our IT infrastructure, including those provided by third parties, also may experience interruptions, delays, or cessations of service, or produce errors in connection with systems integration or migration work. Such disruptions may adversely affect our ability to receive or process orders, manufacture and ship products in a timely manner, or otherwise conduct business in the normal course.

Economic and market conditions · Economic recession and downturns

Adverse economic conditions may negatively affect customer demand, and could result in postponed or decreased spending amid customer concerns over elevated inflation and interest rates or slowing demand for our products, reduced asset values, volatile energy costs, the availability and cost of credit, and the stability of financial institutions, financial markets, businesses, local and state governments, and sovereign nations.

Geopolitical and trade · Trade policies tariffs and sanctions

Trade policies and disputes could result in increased tariffs and other trade restrictions and protectionist measures, which could increase our manufacturing costs, increase prices of and reduce demand for our products, limit our ability to sell to certain customers, hamper our procurement of components or raw materials, or impede or slow the movement of our goods across borders.

Natural and catastrophic events · Climate change and environmental impact

Global climate-related risks, and legal, regulatory, or market measures related to climate, may negatively affect our business, operations, and financial results. We are subject to climate-related risks that could impact the global economy and the IT industry in particular. The physical risks include the adverse effects of carbon dioxide and other greenhouse gases on global temperatures, weather patterns, and the frequency and severity of natural disasters.

Stakeholder relations · Customer satisfaction and loyalty

Failure to deliver high-quality products, software, and services, or to manage solutions and product and services transitions in an effective manner, could reduce demand and negatively affect the profitability of our operations.

Stakeholder relations · Supplier and vendor relationships

We may lose revenue opportunities and experience gross margin pressure if sales channel participants fail to perform as expected. We rely on value-added resellers, system integrators, distributors, and retailers as sales channels to complement our direct sales organization.

Customer and revenue · Customer concentration and key customer dependence

While we expect the buyer base for our AI solutions to continue to expand, to date our AI solutions have been purchased primarily by a small number of larger customers and cloud service providers. If we are not successful in continuing to expand sales to a broader base of customers, our ability to maintain growth in this area may be limited.

Innovation and product development · Product development and randd investment risks

To successfully execute our strategy, we must continue to improve cost structures, optimize sales coverage, improve channel execution, manage the increasingly difficult tasks of inventory management and demand forecasting, and strengthen our capabilities in our areas of strategic focus, while continuing to achieve product innovation that builds on our strategic capabilities.

Innovation and product development · Intellectual property protection and infringement

The use of AI technologies also could expose us to an increased risk of cybersecurity threats and incidents and claims or other adverse effects from infringements or violations of intellectual property rights, including claims related to AI technologies considered to have similarities to other AI technologies.