Shares of Dell Technologies DELL rose sharply in premarket trading on Wednesday after the Pentagon awarded the company a roughly $9.7 billion contract to help manage Microsoft software systems across the US military.
Dell shares gained 3% ahead of the opening bell, extending a rally that has already seen the company’s market value more than double this year.
The move also comes just ahead of Dell’s fiscal first-quarter earnings report, scheduled for release after the close on Thursday.
Wall Street expects Dell to report first-quarter revenue of approximately $35.5 billion, representing year-over-year growth of nearly 52% and broadly in line with the company’s own guidance range of $34.7 billion to $35.7 billion.
Adjusted earnings per share are projected at about $3.00.
Pentagon seeks streamlined Microsoft software management
Under the deal, Dell will provide Microsoft 365 services, advanced cloud subscriptions, and on-premises licensing capabilities across military and intelligence systems.
According to Pentagon officials, the agreement is designed to centralize software procurement and reduce duplication across military departments and affiliated agencies.
Dell Federal Systems secured the contract following a competitive review process, according to Defense Department Chief Information Officer Kirsten Davies and acting Navy Chief Information Officer Barry Tanner.
“The vendors were all evaluated based on competition, comparison to GSA schedule pricing, and overall chain of value to the department,” Tanner said during a Pentagon briefing.
“Going through the process of evaluation, they came out on top,” he added.
Officials said the new agreement will serve as a centralized platform for acquiring Microsoft licenses used throughout the Department of Defense, intelligence agencies, and the US Coast Guard.
“This second-generation blanket purchase agreement will streamline and consolidate critical Microsoft software and services across the Department of War, the intelligence community and the US Coast Guard,” Davies said.
Davies also said the Pentagon expects the agreement to generate approximately $422 million in annual savings by consolidating IT spending across various military branches and agencies.
The Defense Department has faced growing pressure from lawmakers to improve financial accountability and complete a clean audit process while simultaneously seeking a proposed $1.5 trillion fiscal 2027 budget.
Dell deepens ties with Microsoft and government business
The contract further strengthens Dell’s longstanding relationship with Microsoft, one of its major software and infrastructure partners.
Dell remains one of the largest purchasers of Windows PC licenses globally and has maintained a long-running commercial relationship with Microsoft across enterprise computing and cloud services.
The government contract also highlights Dell’s expanding presence in federal technology infrastructure as demand for cloud computing, cybersecurity, and enterprise software services continues growing across government agencies.
The announcement arrives at a time when investors are increasingly focused on Dell’s role in broader AI infrastructure and enterprise technology markets.
Dell founder and CEO Michael Dell has also maintained visible ties to the Trump administration.
Last year, Dell pledged $6.25 billion toward investment accounts for children known as “Trump accounts.”
Earlier this month, President Donald Trump publicly praised Dell during a White House Mother’s Day event, telling attendees to “go out and buy a Dell.”
Dell later congratulated Trump following the 2024 election victory, saying he “look[s] forward to continued progress and opportunity under his leadership and working together toward a strong and unified future for all.”
Michael Dell also joined Trump’s Council of Advisors on Science and Technology.
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