Dell’s Double Turnaround: AI Servers and Trump Support Drive 10x Stock Surge

Article by Xiao Bing, Shenchao TechFlow

If, at the end of 2022, you told a U.S. stock fund manager, “I’m going to heavily invest in Dell,” they would most likely politely end the conversation.

At that time, Dell’s stock was struggling around $30, and the entire company was categorized by the market as “mature and dying.” Its PC business was squeezed between Apple and Lenovo, while traditional servers lost demand to cloud computing. The outdated direct sales model sounded like a joke from another century in the new world defined by NVIDIA and TSMC. The P/E ratio was in single digits, analyst price targets were lower than the current stock price, and institutional investors were quietly reducing their positions.

Three and a half years later, after hours on May 28, 2026, Dell surged nearly 40% in a single day, opening the next trading session at $317 and reaching a market capitalization of $220 billion.

Since the 2022 low, the increase has exceeded tenfold. Michael Dell's personal net worth has surged to $165 billion, making him the seventh-richest person in the world.

This was the most overlooked and最容易被误读的 comeback in the U.S. stock market over the past three years. When examined closely, how did the AI wave and Trump’s support intersect within Dell? Which narrative did Wall Street buy, and which one did the White House nurture?

First, let's talk about the ledger.

After hours on May 28, Dell reported its first-quarter fiscal year 2027 results: revenue increased 88% to $43.8 billion, and EPS rose 214% year-over-year. However, what truly sent the stock soaring was the full-year guidance—the management team raised its revenue forecast from $14 billion to a range of $16.7 billion, with AI servers contributing $60 billion.

Nearly $2.5 billion above Wall Street’s consensus expectations. Such a significant upward revision in guidance is almost unheard of among large-cap stocks.

The logic behind the numbers is clear: COO Jeff Clarke disclosed on the earnings call that AI server orders for the quarter reached $24.4 billion, with $16.1 billion already shipped, setting a new record for backlog. The customer list includes Eli Lilly, Honeywell, and Samsung, and the AI Factory product line added approximately 1,000 new enterprise customers, bringing the total to 5,000.

This is a story about selling shovels, but what makes it fascinating is that the gold miners have changed.

Over the past two years, demand for AI servers has been almost entirely dominated by the four major cloud providers: Microsoft, Google, Meta, and Amazon. This is a highly concentrated market with extreme power imbalances in negotiation, leaving Dell acting more like a high-end logistics provider—assembling NVIDIA’s GPUs into racks and earning modest profits.

Starting in the second half of 2025, the demand curve began to extend horizontally. Enterprise customers began large-scale procurement of "private AI": they did not want to store their customer data, proprietary models, or compliance records in a rack at AWS. Eli Lilly wanted to train its drug discovery models on its own data centers, and Honeywell aimed to run predictive maintenance for its production lines on its own servers.

The demand for "on-prem AI" is precisely what Dell has excelled at over the past four decades: bundling servers, storage, networking, and services for enterprise IT departments. Cloud providers don’t do this business; Super Micro can’t handle delivery and services; HPE lacks the scale. Dell is virtually the default choice in this market.

Management cited a set of figures during the earnings call: Approximately 85% of enterprises will deploy generative AI workloads on-premises over the next 24 months. This represents a longer-term, more distributed market with a healthier profit structure than the capital expenditures of hyperscale cloud providers.

What Wall Street bought is this curve.

This story has a flaw that cannot be ignored: Dell's gross margin is collapsing.

The gross margin for FY2024 was 24.3%, declining to 20.1% by FY2026, and continued to fall in Q1 of FY2027.

The reason is straightforward: the most valuable component in AI servers is NVIDIA's GPU; in a single 8-GPU H200 server, the GPU accounts for over 60% of the total BOM cost. Dell is essentially an integrator—most of the money spent on GPUs is merely passed through: it buys from NVIDIA on one side and sells to customers on the other, with very limited room for markup. The more AI servers Dell sells, the faster its revenue grows, but its gross margin becomes increasingly diluted.

This is a classic "harvest paradox." A company trades explosive revenue growth for declining gross margins; theoretically, the market should discount it, not premium it.

But the market has given it a premium.

The first reason is mathematical: although the gross margin percentage is declining, the absolute gross profit amount is surging. Dell’s AI server revenue is projected to exceed $25 billion in FY2026 and $60 billion in FY2027 guidance; even if the gross margin is only half that of its traditional business, the absolute gross profit contribution already far surpasses the combined total of PCs and traditional servers. The market has become smarter, focusing on “gross profit in dollars” rather than “gross margin percentage.”

The second reason is more subtle: the market is pricing in the attach rate. For every AI server sold, Dell bundles its own storage solutions (PowerStore, PowerScale), networking equipment, and five-year service contracts. The gross margins on these backend offerings are two to three times higher than those of AI servers. The AI server is the hook—the real profit comes from the fish it catches.

Dell's stock revaluation over the past year essentially reflects the market's renewed understanding of its business model: shifting from a "low-margin hardware distributor" to a "high-margin service platform using low-margin hardware as bait."

This is Dell, the established IT giant whose business model was unexpectedly revitalized by the demand curve for AI, bought by Wall Street.

The story has another half.

December 10, 2025, Roosevelt Room, White House. Michael Dell and his wife Susan Dell stood beside Trump to announce a $6.25 billion donation to the "Trump Accounts" project.

This is a statutory provision included in the One Big Beautiful Bill Act, establishing a tax-free investment account for every American child born between 2025 and 2028. The Dell family’s contribution will provide an initial $250 investment to 25 million American children. It is one of the largest private donations ever made to a signed initiative by a sitting president, more than double the total of all publicly disclosed charitable donations made by the Dell family since 1999.

On that day, Michael Dell himself said something quite thought-provoking: "Forty-one years ago, when I founded this company, we invented the direct sales model. This time, we're doing direct sales-style philanthropy."

Five months later, on May 8, 2026, the day before Mother’s Day, Trump addressed the nation during a public event at the White House, in front of Michael Dell: “Go out and buy a Dell.” On that day, Dell’s stock surged 14%.

In two weeks, on May 27, 2026, the Pentagon announced it had awarded Dell Federal Systems a $9.7 billion contract over five years to consolidate Microsoft software licenses across the entire U.S. military, intelligence community, and Coast Guard. This is one of the largest IT contracts awarded by the U.S. Department of Defense in recent years. The next day, Dell’s stock surged 40% in after-hours trading.

This timeline was nearly identically recounted by Bloomberg: a $6.25 billion donation in December, a White House appearance in May, and a $9.7 billion defense contract at the end of May. An additional detail must not be overlooked: Trump himself quietly purchased up to $5 million worth of Dell stock in 2025.

Michael Dell personally holds approximately 42% of Dell's equity. Since Trump endorsed Dell at the White House, his paper wealth has increased by tens of billions of dollars. The $6.25 billion donated, at this rate of return, represents an investment with a return of more than tenfold.

Ethical controversies are not explored here. What’s worth noting is another observation: this is not an isolated incident. On April 30, 2026, Trump posted on Truth Social praising Intel, causing Intel’s stock to rise 3% after hours; the U.S. government holds a 9.9% stake in Intel. Palantir has also experienced similar “presidential endorsement” rallies. A new market pattern is emerging: in the 2026 U.S. stock market, the president’s social media accounts, the White House’s schedule, and even his personal holdings are becoming a new form of “policy-driven alpha.”

When you place these two storylines side by side, things become interesting.

Only trust the first Dell, the one Wall Street bought—you're looking at an old factory unexpectedly revived by AI demand. The core valuation question is: "How long and how large can the AI server market grow, and can gross margins stabilize?" This is a classic growth stock valuation issue.

Only trust the second Dell, the one raised by the White House. What you're seeing is a company that made a major bet on political and business connections—and won. The core issue in its valuation is: “How many presidential terms and congressional cycles can this relationship sustain?” This is a political risk pricing question.

But the market stacked the valuations of both Dells onto a single financial statement.

GuruFocus estimates the intrinsic value at $153, while the current stock price is $317, indicating that Dell is overvalued by 106% based on this metric. The average target price among analysts is $218, which is also significantly below the current price. Even the most optimistic sell-side analysts have failed to keep up with the stock's momentum.

What does this valuation gap mean? It means the market is paying for something not included in the model.

That’s not AI, because AI has already been built into all models—it’s a political narrative, a market prepricing of the expectation that Dell will continuously secure federal contracts, receive ongoing presidential endorsement, and become the preferred supplier for Trump 2.0’s national AI team.

At this point in Dell's story, we can take a step back and look at the bigger picture.

Over the past three decades, the Silicon Valley narrative in U.S. markets has been one of "technological power versus political power": Apple refused the FBI’s request to unlock iPhones, Google employees protested the company’s work on AI projects for the Pentagon, and Zuckerberg was repeatedly summoned by Congress but steadfastly refused to take sides. This reflects an inherent engineering culture’s defense against Washington.

The 2026 U.S. stock market is telling another story: a new kind of company is rising, actively embracing politics, treating the White House as its most important client, and viewing the president’s approval rating as its beta coefficient. Dell is the cleanest example on this curve; Intel and Palantir are two others.

This curve suggests that traditional financial analysis frameworks are beginning to fail—when a U.S. company can be priced simultaneously by “AI demand” and a presidential like, you need to look beyond its balance sheet and also examine its CEO’s political calendar.

Dell's most valuable asset may be neither its server factories nor its customer list, but the direct line between Michael Dell and the White House.

The next question is: How long can this line be maintained?

Trump’s second term still has nearly three years remaining. If the Republicans lose the midterm elections, if an investigation points to a political scandal involving “contracts for charity,” or if Michael Dell himself has a falling-out with the White House for any reason, this straight line will break. At that point, the portion of Dell’s stock price priced in by the political narrative will be removed by the market at the same speed.

So whether you're holding Dell or considering buying Dell, you now need to ask yourself two questions: Which Dell are you buying? And when do you plan to sell the other Dell?

Disclosure: The author of this article holds shares of Dell.