Is Dell Stock the Big Winner From Super Micro’s Troubles?

TLDR

• Super Micro Computer (SMCI) stock fell 8% Monday to $28.15 after Taiwanese investigators raided its offices over alleged Nvidia chip smuggling to China.
• Dell (DELL) stock jumped 3.8% the same day, with analysts saying Dell could pick up business from Super Micro’s troubles.
• Dell is up 229% so far this year, while Super Micro has fallen 3.8% over the same period.
• Taiwanese prosecutors charged six unnamed individuals with document forgery and breach of trust.
• Dell posted a Q1 earnings beat in May, with $4.86 EPS versus the $2.96 expected, and revenue up 87.5% year-over-year.

Dell Technologies stock climbed 3.8% on Monday while rival Super Micro Computer dropped 8% to $28.15. The split came after Taiwanese investigators raided Super Micro’s offices as part of a probe into alleged smuggling of Nvidia chips to China.

Dell Technologies Inc., DELL

Prosecutors in Taiwan charged six individuals, whose identities haven’t been released, with document forgery and breach of trust, according to The Wall Street Journal. The investigation builds on an earlier case from May, when Taiwanese authorities arrested three people and seized 50 servers.

Super Micro said at the time it was working with authorities to “prevent illicit diversion of server technology.” The company has now confirmed it’s cooperating with officials in Taiwan and other jurisdictions to protect its technology and intellectual property.

Super Micro shares have had a rough stretch. The stock has fallen for five straight trading days, down 21% over that period, though it was pointing 2% higher ahead of Tuesday’s open.

Volatility has been the name of the game all month. Shares have moved more than 4% in either direction on 14 of the 20 trading days in June.

Dell Seen as the Beneficiary

Options trader Bob Lang, founder of Explosive Options, said he’s already looking at Dell as an alternative to Super Micro. He pointed to history as a guide.

Freedom Capital Markets analyst Paul Meeks was even more direct about it. He said anyone wanting exposure to AI data center servers should “just buy DELL at almost any price.”

The numbers back up the enthusiasm. Dell stock has surged 229% this year, a stark contrast to Super Micro’s 3.8% decline over the same stretch.

This isn’t Super Micro’s first brush with controversy. In March, the U.S. government charged co-founder Yih-Shyan “Wally” Liaw and two others over an alleged scheme to divert U.S.-assembled servers to China, violating export-control laws. Liaw resigned immediately, and the stock plunged 33% that day to $20.53.

Dell’s Own Numbers Tell a Story

Dell’s fundamentals have given investors plenty to like lately. The company reported quarterly earnings on May 28th, posting $4.86 EPS against a consensus estimate of $2.96.

Revenue came in at $43.84 billion, well above the $35.74 billion analysts expected. That marked an 87.5% jump year-over-year, driven largely by AI and data-center demand.

Net margin landed at 6.28%, and Dell set FY2027 guidance at 17.90 EPS. Analysts currently expect 17.74 EPS for the current fiscal year.

Dell also declared a quarterly dividend of $0.63 per share, payable July 31st to shareholders of record as of July 21st. That works out to a $2.52 annualized dividend and a 0.6% yield.

Not every signal has been bullish, though. GF Securities downgraded Dell after its nearly 200% run since February, flagging valuation concerns even while acknowledging the company’s record quarter.

Institutional investors hold 76.37% of Dell’s stock. Pictet Asset Management trimmed its position by 14.2% in the first quarter but still held 372,240 shares worth roughly $61.1 million.

Insider selling has also picked up. Company insiders sold a combined $1.4 billion worth of stock over the last 90 days, including sales by directors tied to Silver Lake Partners.

Dell opened at $414.26 on Tuesday, with a market cap of $268.49 billion and a 52-week range of $110.22 to $469.47.

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