Microsoft, Dell Each Get $9.7B From US Government to Cut Costs

Key Takeaways

• The Pentagon announced a five-year agreement worth roughly $9.69 billion for numerous companies, including Microsoft and Dell
• For the Pentagon, the new agreement helps to eliminate duplicative spending from fragmented procurement across different agencies
• Microsoft (MSFT) and Dell Technologies (DELL) stocks were little moved in after hours trading Wednesday, but still hold buy ratings across Wall Street

The Pentagon has awarded Microsoft (MSFT) and Dell Technologies (DELL) $9.7 billion to help them cut costs in a new deal called the Core ‌Enterprise Technology Agreement. The new agreement also encompasses other enterprise software licenses scattered across ​the military services, the intelligence community, and the U.S. Coast Guard into a single contract vehicle. Microsoft, due to its expanded Capex for AI efforts, has seen its debt climb in the past year, hence the new deal will help eat into that mark.

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What The $9.7B Deal Means for Dell, Microsoft and The Pentagon

For the Pentagon, the new agreement helps to eliminate duplicative spending from fragmented procurement across different agencies. The funds come from existing budgets ​already being ​used to ⁠purchase Microsoft 365 subscriptions — covering email, Word, Excel, PowerPoint ​and related tools — along with ​cloud ⁠subscriptions and on-premises licensing, into one place where the full purchasing weight ⁠of ​the department can ​be used to drive down costs. For Dell, the computer company will also provide a suite of software to the U.S. military, continuing the company’s close ties to the US Government.

Dell Federal Systems, a unit of the company dedicated to serving government, won the contract after a competitive process, Defense Department Chief Information Officer Kirsten Davies and acting Navy Chief Information Officer Barry Tanner told reporters at a Wednesday briefing at the Pentagon. “The vendors were all evaluated based on competition, comparison to GSA schedule pricing and overall chain of value to the department,” Tanner said, referring to the General Services Administration, which oversees government purchasing. “Going through the process of evaluation, they came out on top.”

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MSFT, DELL Stock Reactions to Pentagon Investment

Both Microsoft (MSFT) and Dell Technologies stock (DELL) were little moved on Wednesday’s trading session. However, unlike the Windows developer, dell shares have skyrocketed over 20% in the past week. In early May, Trump told reporters and the media to “go out and buy a Dell,” after lauding the Dell family for its donation to Trump accounts. Dell CEO Michael Dell furthermore recently joined Trump’s Council of Advisors on Science and Technology. While many experts see this as a corrupt way to boost Trump’s portfolio after investing in Dell, the fact remains that shares have since surged.

Microsoft, on the other hand continues to be a significant player in the tech sector, bolstered by institutional investments and strategic partnerships. However, the stock has fallen behind other leading tech companies in 2026, with shares now down 15% in the last six months. The Pentagon’s latest investment could be seen as a revitalization strategy. However, the little movement tin MSFT shares after the Pentagon’s deal indicates that shares are not just in-volatile, but continuing to slip up.

Both Dell and MSFT are currently rates as buys, according to a slew of Wall Street analysts tracked by TipRanks. MSFT has an average price target of $559, which would mean an upside of over 30% from its current price of $412. On the other hand for Dell, which is trading at $317 after hours, the average stock forecast over the next 12 month is $264, which actually implies a steep correction fro its current price.

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