DELL Stock Jumps After Trump's Buy Recommendation... 'Noisy' Conflict of Interest Controversy

▲ Dell, Donald Trump/AI Generated Image

Dell Technologies (DELL) stock price surged by up to 10% during trading hours, and its market capitalization increased by over $15.8 billion, after U.S. President Donald Trump publicly stated, “Buy Dell.” Amid a 757% year-over-year surge in AI server sales, the president's repeated public endorsement once again fueled the stock price.

According to cryptocurrency specialized media BeInCrypto on July 6 (local time), President Trump said at a Wall Street opening event for the launch of the Trump account, “Go out and buy Dell. I’m going to make sure you get that money back one way or another. I also want to thank Micron.” Immediately after the remarks, Dell's stock price soared by up to 10%, reaching around $429.35 during the trading session. The increase in market capitalization exceeded $15.8 billion.

This is not Trump's first public endorsement of Dell. President Trump mentioned buying Dell at an event in Georgia in February, then repeated the same remarks at a White House event in May, at which time the stock price hit an all-time high. The Trump account purchased $1 million to $5 million worth of Dell stock on February 10, nine days before his first public endorsement, and ethics experts raised conflict-of-interest issues surrounding the stock purchase and public support. Dell's stock price has more than tripled since February.

Political statements were not the only factor driving up the stock price. Dell's AI server revenue in the latest quarter was $16.1 billion, a 757% increase year-over-year. The company raised its annual AI server target to approximately $60 billion, and its order backlog exceeded $50 billion. During the same period, Dell also secured a five-year, $9.7 billion information technology contract from the U.S. Department of Defense.

Concerns are also growing regarding the rapidly rising stock price. Truist analyst Matthew Niknam raised his price target to $360 but maintained a 'Hold' rating. Dell's price-to-earnings ratio significantly exceeds its long-term average of approximately 9 times, and its gross profit margin has fallen from about 21% to below 18% in one year. Cost burdens from NVIDIA's high-priced semiconductors and insufficient memory supply have pressured profitability.

Dell's stock price also showed volatile movements, including an approximately 8% drop in a single day on July 2. Amid investor Michael Burry's warning of an AI bubble shaking investor sentiment, Dell's next earnings announcement has been identified as a key test to confirm whether AI server demand can support the elevated stock price levels.

[Key Article Summary]

-Immediately after President Trump's remark, "Buy Dell," Dell's stock price surged by up to 10% during trading, and its market capitalization increased by over $15.8 billion.

-Dell's AI server revenue in the latest quarter was $16.1 billion, a 757% increase year-over-year, and its annual target has been raised to approximately $60 billion.

-Amid concerns surrounding Dell's high price-to-earnings ratio and a gross profit margin that has fallen below 18%, the next earnings announcement has been identified as a key test.

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