DELL Earnings Justifying Stock Rally? AI Growth & Backlog Delivery Critical

invest smarter with Schwab. We are back our morning trade live looking at some of the infrastructure names this morning. As Alex pointed out, it's a down day for a lot of the AI trade. Dell included. Obviously that's going to be reporting later. HPE is down two. Core weaves down 3.4. Super micros down over 2% as well. But we do have Dell reporting later today. So let's go inside out and preview that report. Joining us now to do that is Ryan Trout who's Futurama's president of signal 65. Ryan nice to see you again. All right. What are we expecting from Dell tonight. I mean what have they got to say. Are we going to keep seeing AI demand offsetting the memory pressures. Yeah it does feel like that's going to be the case. I think memory pricing and pressure has really been the bear case for a lot of this from the infrastructure names for a long time. But I think if you if you really look at the demand curve that we continue to see increasing, you know, the Nvidia earnings gave everybody a very good preview of what what we could expect there. I do think Dell is in a very good position to figure out a way to offset that. You know they're the largest of those kind of OEM system integrators in this space. And they have a lot more pricing power than some of the smaller some of the smaller options. Okay. So is it a bit of a similar story to what we heard with, I guess, Lenovo? I mean, is it, you know, the fact that some of these companies, they have the AI server business that's different to like an HP. Q which suffered last week on on higher memory input costs. That's kind of saving the day here. And how long do you think that can last? I do think them owning the server business outright is a big advantage. I, you know, I think as more of these non hyperscaler companies begin to integrate a lot of this technology where they're buying this infrastructure or leasing this infrastructure very directly, it gives an advantage to, to somebody like Dell, right? There's big, big improvements that we're seeing even in the testing we're doing with our pinnacle benchmark about like, you know, how much benefit you can get performance and real action per per dollar you spend when doing on prem versus like the cloud hyperscalers. And I think Dell is going to be able to lean into that much more heavily in the next quarter. What about the backlog? I mean, how much of that would you like to see? That is actually translating into sales at this point. Well, I mean, obviously as much as as much as we can. I think that's all limited by, you know, what the kind of the supply constraints are. Memory is still the biggest one. I talked to a lot of customers and a lot of people in the industry that talk about they have they have CPUs, they have GPUs. And memory is that is that constraint. And even, you know, listening to some of the, the, the language that Jeff Clark has used from Dell, he's talking about demand is accelerating meaningfully, right. And outpacing supply. So I still continue that to believe that that backlog will probably grow over the next quarter when they talk to us tonight. What metric are you looking out for the most? I want to see. So I would say the the $60 billion forecast that they have for their data center revenue seems low. And I think you're already seeing some of the some of the analysts in the market kind of creep that up a little bit. I think we've seen 65 billion as kind of one of the consensus numbers. I think based on what we've seen out of Nvidia just from last week, that that number should go up pretty significantly. Gross margins. I mean, what would you like to see on that? You know, any improvement over what they had last quarter would be good. I know they were they've been compressed a little bit. I think they're in the 17% range, which again, as a as a system builder, an OEM that is pressured by memory costs. That's that's pretty tough to do. But I think Dell has the advantage of, of selling a lot of attach to these server infrastructure deployments, a lot of networking, a lot of storage, a lot of services that can help improve those margins quite a bit. So at least a few points I think would be on the table. And I mean, this is up what, 250% year to date. I mean, how much of this has been priced in the good news because obviously we've set a pretty high bar this time around. You know, you look at a lot of these infrastructure names, even the Nvidia's of the world, right? And you start to wonder what has been priced in and what hasn't. I think it's all about, you know, we expect a beat in a res. It's the dramatic nature of whatever the res happens to be. I still think there's room for this to increase. Just like I think we saw a really good day for Nvidia after its earnings announcements. You know today is a little bit of an exception. Obviously everything kind of in the red. But I would expect Dell to to still have quite a bit of room to grow. All right. And then we're also going to be hearing from HPE later in the week. Really appreciate the preview. Ryan as always. Good to See you. Ryan Trout, the future president of signal 65. Let's trade it now with Tom white, host of Fast Market. Good morning to you, Tom. Just walk us through an example. Trade on Dell ahead of this print. Yeah that's part of the scary thing with you know a stock that's up 250% so far in 2026, up over 550% from years ago. So that's a concern when you look at it. Yeah, they're growing into maybe their new multiple. But at the same time, when you have a stock that's gone parabolic like this, you got to take that into consideration where, hey, even if they hit on every metric and raise guidance that the stock might not go higher, but you can still use the option market to create some leverage. This is a high priced stock, right. $440 or so. So using the option market to take a directional bias might make sense. As opposed to trading the stock at this point, option market pricing in about a plus or minus eight and a half 9% move in either direction on a one day basis. So I looked at something short term out in the September 4th weekly options that expire in just three days. And you can take a directional bias where you don't have to be aggressive, you can be passive. And this is a short put vertical that's neutral to bullish selling the out of the money 405 strike put and then buying the 395 strike put. So a short $10 wide neutral to bullish put vertical. You're collecting roughly about a 250 credit. So that's what you can make $250 per spread with about $750 in risk. So you've got a lot more risk than reward. But you've got a probability that that short 405 strike will be out of the money at expiration of about 73%. So the stock goes higher, stock consolidates stock goes lower but remains above the break even of 402 50 to the downside. You're going to be profitable on this type of trade. So while you know we've seen 250% gain for the stock. If you're still bullish on the name, but you don't want to be aggressive by buying a call or buying a call vertical, you can sell a short put vertical that is about one standard deviation. Move to the downside before you get hurt on this. Now I mentioned the fact that you've got $750 in risk to make only 250. I mentioned those higher probabilities of success. Implied volatility levels really elevated going into this report. We'll see that Vol crush post earnings also where even if the stock goes down we're going to see a Vol crush because the event risk is passed on that. And the idea here is to let this go out worthless. And the stock remains above 405. But even if it does fall the stock or the vertical price will contract. You can buy it back cheaper as long as it remains above that 402 50 break even. Tom, really appreciate it. Thank you so much. Ahead of Dell's print later tonight watching Air Demand. We're watching the server demand. We're watching those margins as well. The