Why Dell Technologies Stock Just Jumped

Dell Technologies (DELL +1.05%) surged roughly 8.4% on Friday before falling back, finishing the day up 2.2%.

The stock jumped initially after news broke that rival Super Micro Computer’s co-founder was arrested on federal charges. It retreated from its high later in the day’s trading, unable to escape the larger market slide. The S&P 500 fell 1.6%, and the Nasdaq Composite lost 2.1%.

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NYSE: DELL

Dell Technologies

Today’s Change

(1.05%) $1.65

Current Price

$158.41

Key Data Points

Market Cap

$104B

Day’s Range

$157.83 - $169.87

52wk Range

$66.25 - $169.87

Volume

942K

Avg Vol

7.7M

Gross Margin

19.97%

Dividend Yield

1.34%

Super Micro’s legal crisis is Dell’s gain

The U.S. Attorney’s Office for the Southern District of New York charged Super Micro co-founder Yih-Shyan “Wally” Liaw and two associates with allegedly smuggling $2.5 billion worth of its AI servers to China in violation of U.S. export controls. Liaw was taken into custody on Thursday. SMCI shares cratered 33.3% on the news.

Dell’s fastest-growing business segment competes directly with Super Micro – both build AI servers filled with Nvidia chips – and the allegations will likely prompt Super Micro customers to look elsewhere.

Image source: Getty Images.

The fundamentals back it up

Dell’s AI server revenue hit $9 billion last quarter, up 342% year over year, and the company has a backlog in the dozens of billions.

If the macroeconomic picture looked differently, I might feel otherwise, but I don’t think this is the time to be making new investments in AI-related stocks. Valuations are stretched, and a recession could be very painful for the sector.