Dell Shares Jump 230% This Year as Trump Tells Americans to “Buy Dell”

Dell’s shares (DELL) have jumped 230% over the past year. This rally was fueled partly by Trump telling Americans to “buy Dell” during his recent public appearances. The president has pushed the tech company three times in the last five months.

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While this political backing helped the stock rise, many market traders are betting the price will drop. Underneath the excitement, thin profits and reliance on another company show why some investors are worried.

Trump Sparks Dell’s Rally

Trump gave his latest plug on Monday at a White House ceremony, causing the stock to briefly jump as much as 10%. He previously gave similar recommendations in February and May.

However, government records show that Trump bought between $1 million and $5.1 million in Dell shares just nine days before his first recommendation. Even though the firm’s AI server sales grew 757% over the past year, options traders are staying negative. The balance of standing bets reveals that more money is riding on a fall than a rise.

Nvidia Impacts Dell’s Profitability

The biggest reason for this investor doubt is hidden inside the computer servers Dell sells. Dell builds the outer box, while Nvidia (NVDA) makes the most valuable parts. Dell must buy Nvidia’s expensive chips and then pass that high cost to the final buyer.

Because of this situation, a recent $16 billion haul in AI server sales was mostly Nvidia’s revenue crossing Dell’s books. This leaves Dell with a very thin slice of the cash. In fact, Dell’s operating margin for its server group dropped from 14.8% down to 10.5% as these sales grew.

Rising Memory Costs Pressure Dell

Higher expenses make things even more difficult for Dell. Over a recent 20-day period, Dell’s stock rose about 4%, but the cost of the memory and storage parts it buys went up 10%. Costs are going up much faster than the stock price.

Dell also usually moves the day after Nvidia does, meaning it rides Nvidia’s demand instead of creating its own. If Nvidia’s AI demand cracks, Dell will feel the trouble the next day. The stock rally will eventually need real earning power to keep up with the noise.

Is Dell a Good Stock to Buy Right Now?

Dell’s stock (DELL) carries a Moderate Buy consensus, based on 21 analyst ratings over the past three months. Out of those, 14 call it a Buy and seven recommend a Hold. The average 12-month DELL price target sits at $451.33, which represents 9.7% upside potential. (See the DELL stock forecast)

See more DELL analyst ratings

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