Like many companies, Dell Technologies (DELL) went from bad to worse last week.
The stock was already down double digits heading into last week. Then came President Trump’s “Liberation Day” on Wednesday, putting Dell squarely in the crosshairs of an escalating global tariff war.
On Thursday, Dell was the worst performer on the S&P 500, plunging 19%. In all, the stock has shed nearly 44% for the year.
Morgan Stanley analyst Erik Woodring didn’t pull any punches in a client note following Trump’s latest tariff announcements, calling the measures “calamitous” for IT hardware makers like Dell.
Nearly all products in the category sold into the U.S. are now subject to import tariffs ranging from 25% to 54%. That includes goods made in China (54%), Vietnam (45%), Thailand (36%), India (26%) and Malaysia (24%).
Woodring warned that retaliatory tariffs from countries like China would only compound these challenges. “Reciprocal tariffs add to the growing list of concerns we have on our (IT) hardware coverage,” he wrote.
And that’s on top of the downturn the industry was already facing.
“Policy uncertainty, deteriorating business/consumer sentiment, and worsening macro data have resulted in slowing enterprise hardware spending growth and persistently negative consumer electronics spending intentions since late February,” Woodring said.
It’s not just Dell getting hit.
Apple (AAPL) was among the hardest-hit tech names, sliding 9.3% on Thursday and another 5.6% on Friday. The stock is now down 23.6% year-to-date. Like Dell, Apple manufactures much of its hardware in countries now subject to steep tariffs.
Dell has become a quiet force in AI
Dell isn’t often mentioned in the same breath as the flashier names leading the AI boom. But inside the tech community, the company has earned a reputation as a key AI player.
For many enterprise customers, access to Nvidia’s chips comes through Dell’s servers. The company’s storage products now anchor a growing number of AI infrastructure stacks, and its consulting arm helps clients design and scale their AI systems.
That alignment with AI helped power Dell’s stock to a 90% gain in 2023. Then it more than doubled in the first five months of 2024, peaking near $180 in May.
But like most AI stocks this year, Dell has pulled back. The stock now trades just above $71.
Still, the very thing dragging it down in the short term could end up being the reason investors come back.
Dell’s Infrastructure Solutions Group (ISG) — which includes its AI-optimized servers — has become a major growth engine. On the company’s recent earnings call, Vice Chairman and COO Jeff Clarke said a 7% rise in revenue to $23.9 billion was “driven by robust ISG growth.”
In the fourth quarter alone, AI-related demand totaled $1.7 billion in new orders, $2.1 billion in shipments, and a $4.1 billion backlog as customers worked through infrastructure upgrades.
Dell is also close to locking in a $5 billion deal to supply Elon Musk’s xAI with AI-optimized servers.
So while the company is facing serious near-term pressure, the momentum in its AI business could become a meaningful tailwind.
“We continue to differentiate ourselves with consistent performance through numerous economic cycles, different technology buying and adoption cycles, and our rapidly innovating technology ecosystem,” Clarke said on the call.
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