What Happened?
Shares of computer hardware and IT solutions company Dell (NYSE: DELL) jumped 7.2% in the afternoon session after the company, along with Nvidia, signed a major contract with energy firm TotalEnergies to build a new supercomputer.
The deal for the high-performance computing (HPC) system, dubbed Pangea-5, is valued at more than €100 million ($117.4 million). The new system will be installed at TotalEnergies' scientific and technical center in Pau, France, and is expected to be operational in 2027.
According to Dell Technologies EMEA President Adrian McDonald, the system will provide TotalEnergies with the computing power to "accelerate discovery, increase efficiency, and drive the energy transition forward." This news adds to recent positive sentiment, as analysts at Mizuho maintained an "Outperform" rating on the stock just two days prior.
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What Is The Market Telling Us
Dell’s shares are very volatile and have had 20 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 17 days ago when the stock gained 3.1% on the news that analysts at Melius Research and Citigroup raised their price targets on the stock, citing increasing demand for the company's Artificial Intelligence (AI) servers.
Melius Research increased its price target to $245 from $200, while Citigroup adjusted its target to $235 from $180. Both firms kept their "Buy" ratings on Dell's stock. The positive view from Melius was based on two key points.
First, the firm saw Dell gaining a larger piece of the AI server market as businesses increased their spending. Second, an indictment by the Department of Justice against a competitor, Supermicro, created an opportunity for Dell to win over new customers.
Dell is up 97.3% since the beginning of the year, and at $252.18 per share, has set a new 52-week high. Investors who bought $1,000 worth of Dell’s shares 5 years ago would now be looking at an investment worth $2,530.
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