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%.
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.
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
