Why Dell Stock Is Surging Today

Source The Motley Fool

Dell Technologies (NYSE: DELL) stock is making big gains in Wednesday's trading. The company's share price was up 7.7% as of 2:15 p.m. ET and had been up as much as 10.1% earlier in the daily session.

Dell stock is soaring today following news that Super Micro Computer's (NASDAQ: SMCI) financial auditor has resigned. Both companies are leading players in the artificial intelligence (AI) server market, and challenges for Supermicro could create opportunities for Dell. Supermicro's share price was down 32.3% at the time of this article's filing.

Dell climbs as Super Micro Computer flashes warning signs

Super Micro Computer submitted a filing to the Securities and Exchange Commission (SEC) today that revealed that Ernst & Young had resigned as the company's financial auditor. In the resignation letter that Ernst & Young submitted to Supermicro, the accounting firm said that it would no longer serve as the server specialist's auditor due to "information that has recently come to our attention which has led us to no longer be able to rely on management's and the audit committee's representations."

The news of Ernst & Young's departure was the latest big blow to Supermicro stock, which is now down 72% from the high it reached in March. With a dramatic swell of bearish sentiment surrounding its rival, investors are getting more bullish on Dell.

What does the controversy surrounding Supermicro mean for Dell stock?

While the issues surrounding Supermicro won't do anything to change the underlying performance or the competitive standing of its products, they could nevertheless create dynamics that wind up benefiting Dell. For starters, customers could be driven to Dell's products if Supermicro winds up being plagued by scandals.

Additionally, investors who are looking to capitalize on rising demand for AI servers may continue to see Dell as the more dependable and attractive opportunity. If Supermicro cannot find a new auditing firm to complete the filing of its already delayed 10-K filing on time, the stock could be delisted from the Nasdaq exchange. If that winds up being the case, Supermicro stock could see a huge outflow of investor support -- and it's possible that some of that support would flow into Dell stock.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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