Bull v. Bear: Can DELL Maintain Strength in Hardware Rally?

本站添加: 2026-05-31

[00:00:01]Welcome back to past market here on Schwab Network. Dell reports after the bell today with Wall Street looking for 304 share and adjusted earnings on revenue of close to 35.5 billion. Shares have been gaining some ground today after Dell secured a 5-year 9.7 billion contract with the Pentagon. A deal that adds to investor optimism around the company's AI and enterprise infrastructure business. Investors will also be watching whether demand for AI optimized service continues to drive blowout growth in Dell's infrastructure solutions group. The company said ISG revenue could more than double year-over-year, helped by billions in AI server sales as enterprises race to build out generative AI capacity. Dell's client solutions group that includes PC is expected to show more modest growth.

[00:00:49]All right, time now for the tugof-war on Dell. For that, let's welcome back in our co-host Kevin Green and Nate [music] Peterson. It is bull versus bear time.

[00:00:56]Before we get to your example trades, we got to get each of your thoughts on Dell. It's been a bullish year for Dell.

[00:01:01]Investors have been all in on this one, Nate. We'll start with you. Your takes.

[00:01:06]>> So, so I'm the bear. Is that right?

[00:01:08][laughter] >> That's all right.

[00:01:10]>> I I'm being playful. Um, look, so you know, I went over their last quarter earnings report. uh and you know record this record backlog AI optimization server growth um the the company is hitting on all cylinders um but you know when you look at uh what might be bearish in a stock like this uh is just that you know the stock closed at 148 when they reported their last quarter in late February um they have they're up over 100% they're up 30% of the last 5 days the RSI is at 84. Uh so the question would be okay yeah we kind of understand that Dell has it going on and they're benefiting from AI obviously they are a hardware trade which is what the market has been gravitating towards over the past couple of months here uh you look at their PE forward PE is just 23 um but you got to remember this is a hardware company and when they were if you go snap back to one year their PE was around 13 because it's very common for these types of companies uh to trade in those low teens types of pees. Why has that changed? Well, obviously the narrative around, you know, hardware, chips, memory, it's all been that, hey, this time is different and Dell is being included uh in that category. Analysts have been bullish on that as well. Um, but you know, one thing that also stands out if you were to be a bear that in my mind is if you look at those memory costs and what Huelet Packard has to say last night, stock trading down even after a beat there. So perhaps that those memory costs could be a problem for some of their margins going forward.

[00:03:03]>> All right, KG, your take before we get into the example trades.

[00:03:07]Well, I mean, Nate made a lot of really good points here, and that would be in a normalized environment, but this is a normal environment at the end of the day, right? Uh, this is a company that's really going to move on the AI infrastructure uh segment of their business, which is only about what 15% maybe 20%, but it is growing. And so, I think that headline number is going to be the key driver here. And if we're looking at some of the catalyst for some of these other names within this space, especially when you're looking at CPUs, uh that that's really been the backlog of orders and the backlog of deals that they have in the pipeline over the next three to five years. And that's going to be a driver for Dell. Now, they will have some headwinds when it comes to the personal uh PC market. We know that that has been a little bit lackluster, but even if you look at maybe some of the channel checks coming out of Taiwan semiconductor and others, uh they do believe that you are starting to see a start of a refresh cycle when it comes to the personal PCs and personal laptops. But I think this is all about the CPU space. And yes, it's trading at a what a 23 24 forward multiple. It is trading at all-time highs. Very high bar going into this. Uh but it's that one line item, those two line items that we have there regarding artificial intelligence and their ability to expand that business and increase that business business when it comes to their overall revenue mix that's really going to drive this name. It's a tough one when you're looking at the chart as well. Obviously, uh especially I believe yesterday we had a little bit of a dogee candle that set up on that chart. Uh but overall, I think this is a a name that probably could still ride the wave of artificial intelligence as long as they say the right things. And I haven't seen a company yet that has actually come up short when it comes to the backlog of orders, especially when it comes to CPUs and GPUs.

[00:04:45]>> All right, let's get into the example trades. Nate, we'll start out with yours. What's your approach?

[00:04:50]>> Uh, yeah, certainly. So, if you had, you know, maybe a bearish lean or uh if you're long this stock and you're thinking, hey, maybe, you know, it has run quite a bit uh here over the past couple of months here in the past 5 days, 30%. Uh they've also yes they had news of the 9.7 billion announcement but uh yeah they're moving the stock up again uh in in uh and to kind of price that in. So if you had a little bit of bearish lean one way that you could approach it uh I was looking at a put calendar spread and I looked at the implied move. Implied move is about you know 30 bucks we'll call it uhish post earnings. So that's what's the options market is anticipating for tomorrow. So, I was going down to the 295 strike uh at the time I was looking the put, selling that one for tomorrow, and then going out to the next weekly June 5th 295 strike. Same strike expiration for a combined de uh debit of $3.25.

[00:05:46]So, with a strategy like this, obviously number of reasons why I chose this one.

[00:05:52]You've got implied volatility for uh the contract that I'm selling at 214%.

[00:05:58]Uh the one that I'm buying is at roughly 100%. Uh so you get that IV discrepancy.

[00:06:03]This is a highpriced dollar stock. And so here you can use options and put out basically 1% or less than 1% of nominal at that $3.25 debit. And uh what do you want to happen with a strategy like this? Ideally tomorrow it would close as close to 295 as possible.

[00:06:23]>> Uh KG, your thoughts before you set up your example trade?

[00:06:27]>> Yeah. So Nate is basically leveraging the IV skew between the expiration for tomorrow and then looking further out.

[00:06:35]If you're looking at tomorrow's expiration, we have an implied move of around let's say 10% or so kind of depending on the at the moneys right now because the market is moving a little bit higher. So he's trying to uh reduce some of the uh long put debit uh by also then shortly uh selling the the near dated uh put here. and he's right. You want to see a move uh closer to the strike that you have uh rather than an a really extreme move to the downside, but if the stock does move to the upside as well, it's also then risk defined. So, he's just leveraging IV skew uh for a name like this that does have a lot of anticipation going into the report. And this is one of the ways that you could try to get some downside exposure, neutral the downside exposure uh by leveraging uh the complex, if you will, especially on the put side in order to uh reduce some of that debit for the longer put and and then he's able to readjust it after the expiration as well or tomorrow's expiration. He's able to adjust it either to the upside, downside, or even take off uh that short put.

[00:07:35]>> And KG, your example trade.

[00:07:38]>> Yeah. Yeah. So, I'm going to be the bull on this one here. This is actually just going to be a long call vertical spread here. Looking out to the May 29th expiration. So, that's going to be tomorrow. Uh, buying the 320, selling the 325 here. Doing this for a debit of $2.15.

[00:07:54]So, the max loss on this trade is $215 with a max profit of $285 and a break even point of $32,22.15.

[00:08:02]You'd need to have the stock move above that 325 in order for this to have max profit. Uh but at the end of the day, it's still for the most part an at the money uh call spread. So uh the max loss if it does go against you, that premium will roll off very aggressively. You have to be mindful of that. But the trend has been higher highs, higher lows. And once again, I haven't seen a company yet that has missed on their arpoo expectations, especially when it comes to artificial intelligence. And if the market does like the report, maybe the stock continues to move higher. This is where uh this trade would actually benefit in that type of environment.

[00:08:37]Nate, quick thought on this.

[00:08:39]>> Yeah, you know what I like about Kevin's trade is that if you look at a company like Marll for example that reported last night uh beat and raise stock had moved a lot into the report stock is flat though it's been you know even oscillating between up a percent down a percent basically right in that area. So with something like Dell because it's run up so much uh even if you get a beat and raise you still could get a muted response but if you get a flat response with a stock here at 327 or it's between 325 330ish then by Kevin strike selection here you can still have a profitable trade. Most spread traders, bullish spread traders would probably go to like a 340, 345 uh to try to get some kind of a 1:3 ratio or something in that range. But Kevin took it down to basically where it's just in the money so that in that outcome, if you get a flat response from Dell, you can still get out of here with a profit, which uh you know, I think is more prudent given the run in the stock.