Trump’s Dell praise renews ethics questions as shares rise

President Donald Trump’s public praise of Dell Technologies is drawing new scrutiny after the company’s shares rose on another day when he promoted the computer maker, Fortune reported. The attention matters because a former White House ethics lawyer told Fortune that presidents should not use the office to favor specific companies, even when the company is also benefiting from strong business demand.

Trump rang the stock market’s opening bell from the Oval Office on Monday with Cabinet members and chief executives present, Fortune reported. Michael Dell and Susan Dell stood nearby as Trump thanked them for contributing to Trump Accounts, investment accounts for children tied to his name.

In remarks posted on YouTube and cited by Fortune, Trump called the Dells “incredible people” and told listeners to buy a Dell computer. Fortune reported that Dell shares rose as much as nearly 9% that day before ending 4.4% higher.

Stock gains and government ties

Fortune reported that Monday marked the third trading day since February when Trump’s public praise of Dell lined up with a same-day gain in the company’s stock. The other dates were Feb. 19 and May 8.

Nine days before Trump first told an audience in February to buy Dell, an account bearing his name purchased between $1 million and $5 million of Dell stock, according to an annual financial filing previously reported by Fortune. Fortune said Michael Dell’s paper wealth rose by estimated amounts of $606 million, $8.0 billion and $4.6 billion on the three days tied to Trump’s comments, while noting those figures do not separate Trump’s remarks from other market forces.

Fortune also reported that the Defense Department awarded Dell a five-year contract on May 27 worth up to $9.7 billion to consolidate Microsoft software licensing. Fortune said that figure is a ceiling for the contract, not guaranteed immediate revenue for Dell.

Analyst points to AI servers

Patrick Moorhead, chief analyst at Moor Insights & Strategy, told Fortune that Dell’s rise is better explained by demand from hyperscale and “neocloud” customers buying AI servers. Moorhead described the market for the largest AI server orders as a contest led by Dell and Supermicro, according to Fortune.

Dell’s largest recent one-day move came after its earnings report, Fortune reported. Shares climbed 32.8% on May 29 after the company reported record quarterly revenue, $24.4 billion in AI orders, $16.1 billion in AI server revenue and a higher full-year outlook of about $60 billion in AI server revenue.

Moorhead told Fortune that Trump’s comments may have affected retail traders, but he did not see institutional investors changing valuations because of presidential praise.

Ethics concern centers on endorsements

Richard Painter, who served as chief White House ethics lawyer under President George W. Bush, told Fortune that Trump trading Dell stock was “egregious.” Painter also said a president should not endorse a particular business, even without any stock trading involved.

Painter told Fortune that Trump’s instruction to buy a Dell computer was an endorsement. He said federal conduct standards have long barred executive branch officials from promoting private companies, according to Fortune.

Painter said such praise can affect markets because investors may believe a president has knowledge about future federal contracts or government business involving the company. Fortune reported that the White House said Trump was properly praising the Dells and other wealthy donors for giving to Trump Accounts, calling the Dells patriots helping working-class children.

Dell did not respond to Fortune’s request for comment. Fortune also reported that Michael Dell has had White House access across administrations, including service on a science and technology advisory council under George W. Bush, meetings with tech executives under Barack Obama and participation in Trump’s Manufacturing Jobs Initiative in 2017.

This story draws on original reporting from Fortune.