Super Micro Computer’s (SMCI) pain appears to be Dell Technologies’ (DELL) gain.
DELL stock was up as much as 10% on October 30 after rival Super Micro Computer announced that its auditor, Ernst & Young, has resigned amid a growing accounting scandal at the company. Super Micro Computer makes high-efficiency servers used in data centers to run artificial intelligence (AI) applications and models.
News of the auditor’s resignation sent SMCI stock down 32% on the day. However, investors appear to be shifting capital to DELL stock, with its shares on pace for their best day in more than six months. While Dell Technologies is best known for its personal computers (PC), the company also makes high-efficiency servers that are used in data centers and is a direct competitor of Super Micro Computer.
Dell’s AI Opportunity
Several media outlets, including Barron’s, are pointing out that the troubles afflicting Super Micro Computer present an opportunity for Dell to capitalize on. With customer confidence in Super Micro Computer shaken, there’s an opportunity for Dell to take market share in the fast-growing market for high-efficiency servers that are used to run AI applications.
Analysts say that Dell is positioned to gain if customers decide to switch from using Super Micro servers, noting that many companies, such as cloud computing firm Coreweave and Elon Musk’s xAI, currently use both Super Micro Computer and Dell servers, making it easy to move all their business over to Dell.
DELL stock is up 74% so far this year.
Is DELL Stock a Buy?
Dell Technologies stock currently has a consensus Strong Buy rating among 18 Wall Street analysts. That rating is based on 15 Buy and three Hold recommendations assigned in the last three months. There are no Sell ratings on the stock. The average DELL price target of $144.59 implies 10.19% upside from current levels.
