Written by: Little Cake, Shen Chao TechFlow

If at the end of 2022, you told a U.S. fund manager "I want to heavily invest in Dell," they would likely politely end the conversation.

At that time, Dell's stock price was struggling around 30 dollars; the entire company was categorized by the market as "mature to the point of dying," with its PC business squeezed by Apple and Lenovo, traditional servers losing demand to cloud computing, and the outdated direct sales model sounding like a joke from the last century in the new world defined by Nvidia and TSMC. The price-to-earnings ratio was just in single digits, analysts' target prices were lower than the current stock price, and institutions were quietly reducing their holdings.

Three and a half years later, after hours on May 28, 2026, Dell surged nearly 40%, opening at 317 dollars the next day, reaching a market value of 220 billion dollars.

From the low in 2022, the rise exceeded tenfold. Michael Dell's net worth soared to 165 billion dollars, making him the seventh richest person in the world.

This is the least visible but most easily misunderstood comeback in U.S. stocks over the past three years. When put under a microscope, how do the waves of AI and the endorsement by Trump intersect for Dell? Which story is Wall Street buying, and which one is the White House nurturing?

The Dell that Wall Street buys

Let’s talk numbers.

After hours on May 28, Dell announced its Q1 results for FY2027: revenue grew by 88% to 43.8 billion dollars, and EPS increased by 214% year-on-year. But what really ignited the stock price was the full-year guidance, with management raising the original revenue expectation of 14 billion dollars to a range of 16.7 billion dollars, of which AI servers contributed 60 billion dollars.

This was nearly 2.5 billion dollars higher than Wall Street consensus expectations. In large-cap stocks, such an adjustment in guidance is almost unheard of.

The logic behind the numbers is very clear: COO Jeff Clarke disclosed on the conference call that AI server orders for the season totaled 24.4 billion dollars, with 16.1 billion dollars already shipped and back orders hitting a historical high. The client list includes Eli Lilly, Honeywell, and Samsung, while the AI Factory product line added around 1,000 enterprise clients, bringing the total to 5,000.

This is a story about selling shovels, but the fascinating part of the story is that the gold miners have changed.

For the past two years, the demand for AI servers has been almost monopolized by the four major cloud providers: Microsoft, Google, Meta, and Amazon. This is a highly concentrated market with extremely unequal bargaining power, and Dell has been more of a high-end mover, assembling Nvidia's GPUs into cabinets and making a modest profit.

Starting in the second half of 2025, the demand curve began to expand sideways. Enterprise clients began to make large-scale purchases of "private AI": They do not want to stuff their customer data, proprietary models, and compliance records into some cabinet at AWS. Eli Lilly wants to train drug discovery models in its own data centers, and Honeywell wants to run predictive maintenance for its production lines on its own servers.

The demand for "on-prem AI" happens to be what Dell has excelled at for the past forty years: bundling servers, storage, networks, and services to sell to enterprise IT departments. Cloud providers do not do this business; Super Micro cannot handle delivery and services, and HPE cannot scale. Dell is almost the default choice in this market.

The management quoted some figures on the call: In the next 24 months, about 85% of enterprises will place their generative AI workloads locally. This is a market that has a longer, more decentralized, and healthier profit structure than the capital expenditures of large-scale cloud providers.

What Wall Street is buying is this curve.

The Curse of Gross Margin

This story has an undeniable flaw: Dell's gross margin is collapsing.

The gross margin for FY2024 is 24.3%, but by FY2026 it has dropped to 20.1%, and FY2027 Q1 is still heading downwards.

The reason is simple: The most valuable component in AI servers is Nvidia GPUs, with the cost of a single 8-card H200 server making up over 60% of the entire BOM. Dell is essentially a systems integrator; most of the money for the GPU component is passed through, buying from Nvidia with one hand and selling to customers with the other, leaving very limited room for markup. The more AI servers are sold, the faster the revenue growth, yet the gross margin is diluted.

This is a classic "harvest paradox." A company exchanges explosive revenue growth for declining gross margins; theoretically, the market should give it a discount, rather than a premium.

But the market has given it a premium.

The first reason is mathematical: Although the gross margin is declining, the absolute gross profit amount is skyrocketing. In FY2026, Dell's AI server shipments exceeded 25 billion dollars, with FY2027 guidance at 60 billion dollars. Even if the gross margin is only half that of the traditional business, the absolute gross contribution has already far surpassed the total of PCs and traditional servers. The market has become smart, starting to look at "gross profit dollars" instead of "gross profit percentages."

The second reason is more subtle: the market is pricing for attach rates. Every time an AI server is sold, Dell bundles its storage (PowerStore, PowerScale), network devices, and a five-year service contract. The gross margins of these back-end businesses are two to three times that of the AI servers. The AI server is the hook; the real profits come from the fish pulled out by the hook.

The repricing of Dell's stock over the past year is essentially the market's re-understanding of its business model: from "low-margin hardware mover" to "high-margin service platform using low-margin hardware as bait."

This is the Dell that Wall Street buys, an old IT giant whose business model has been unexpectedly revitalized by AI demand curves.

The Dell that the White House nurtures

The story has another half.

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

This is a statutory project written into the "One Big Beautiful Bill Act," creating a tax-free investment account for every child born in the U.S. from 2025 to 2028. This donation from the Dell family will provide an initial investment of 250 dollars for 25 million American children. This is one of the largest private donations to a sitting president's signature project in history, double the total of all public charitable donations made by the Dell family since 1999.

Michael Dell himself said something intriguing that day: "When I founded this company 41 years ago, we invented the direct sales model. This time, we are doing direct sales style charity."

Five months later, on May 8, 2026, the day before Mother's Day, Trump, in a public event at the White House, shouted to the nation in front of Michael Dell: "Go out and buy a Dell," and that day Dell's stock jumped 14%.

Two weeks later, on May 27, 2026, the Pentagon announced a 9.7 billion dollar contract awarded to Dell Federal Systems for five years, covering Microsoft's software license integration for the entire U.S. military, intelligence system, and Coast Guard. This is one of the largest IT contracts from the U.S. Department of Defense in recent years. The next day, Dell's stock surged 40% in after-hours trading.

This timeline was reiterated with almost the same details by Bloomberg: donating 6.25 billion in December, White House endorsement in May, and a 9.7 billion defense contract at the end of May. One detail not to be overlooked is: Trump himself quietly purchased Dell stock worth up to 5 million dollars in 2025.

Michael Dell personally holds about 42% of Dell's shares. Since the day Trump endorsed Dell at the White House, his paper wealth has increased by hundreds of billions of dollars. The donated 6.25 billion, at this return rate, is an "investment" with a return exceeding tenfold.

The ethical controversies are not discussed here. It is worth noting another observation: this is not an isolated incident. On April 30, 2026, Trump posted on Truth Social praising Intel, and Intel's stock rose 3% in after-hours trading, with the U.S. government holding a 9.9% stake in Intel. Palantir has also seen a similar "presidential endorsement" effect. A new market rule is emerging: In U.S. stocks in 2026, a president's social media account, the White House's event schedule, and even personal holdings are becoming a new type of "policy Alpha."

Two Dells, One Valuation

When viewing these two storylines side by side, things become interesting.

If you believe only in the first Dell, the one that Wall Street buys, you see an old factory unexpectedly revived by the AI demand curve, where the core valuation question is "how long can the AI server market last, how large can it grow, and can the gross margin stabilize," which is a standard growth stock valuation issue.

If you believe only in the second Dell, the one nurtured by the White House, you see a company that has heavily invested in political business relationships and has won the bet, with the core valuation question being "how many presidential terms and congressional cycles can this relationship maintain," which is a political risk pricing issue.

However, the market has layered the valuations of the two Dells onto a single report.

GuruFocus estimates the intrinsic value at 153 dollars, with the current stock price at 317 dollars, meaning Dell is overvalued by 106% by this metric. The average target price among analysts is 218 dollars, which is also well below the current price. Even the most optimistic sell-side analysts cannot keep up with the pace of the stock price.

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

That something is not AI, as AI is already incorporated into all models; that something is the political narrative, the market's advance pricing on "Dell will continue to secure federal contracts, will receive continual endorsement from the president, and will become the preferred supplier for the AI national team in the Trump 2.0 era."

A New Landscape in U.S. Stocks

The Dell story can be viewed from a broader perspective at this point.

In the narrative of U.S. stocks over the past thirty years, Silicon Valley's logic has been "the power of technology versus the power of politics": Apple does not comply with the FBI's requests to unlock iPhones, Google employees protest the company’s AI projects for the Pentagon, and Zuckerberg is repeatedly summoned to Congress but refuses to take a side. This represents a natural defensive posture of engineering culture against Washington.

The U.S. stock market in 2026 is telling us another story: another type of company is rising, proactively embracing politics, treating the White House as its most important customer, and viewing the president's approval rating as its own beta coefficient. Dell is the cleanest sample of this trend, with Intel and Palantir being two others.

This trend signifies that traditional financial analysis frameworks are starting to fail; when a U.S. company can be simultaneously priced based on "AI demand" and "presidential endorsement," you need to examine not only its balance sheet but also its CEO's political calendar.

The most valuable asset of Dell may not be its server factories or its client list, but rather the direct line between Michael Dell and the White House.

The next question is: how long can this line last?

Trump's second term still has nearly three years to go. If the Republicans lose in the midterms, if a certain investigation points to a political scandal of "trading charity for contracts," or if Michael Dell for any reason falls out with the White House, this line will break. At that time, the portion of Dell's stock price priced based on political narrative will be removed from the market at the same speed.

So whether holding or considering buying Dell, one needs to ask oneself two questions: Which Dell are you buying? For the other Dell, when do you plan to sell?

*Interest-related: The author of this article holds shares in Dell.