When the old hardware tree meets the AI boom, it will sprout new buds.

Both Dell and Lenovo have seen their valuations reconstructed amidst the AI boom. Unlike Lenovo, Dell's performance has a much higher "AI content."

On May 28 local time, Dell, a global veteran PC manufacturer, released its financial report for the first quarter of fiscal year 2027. The report showed that the company achieved revenue of $43.8 billion during the reporting period, a significant year-on-year increase of 88%. Net profit attributable to shareholders of the listed company reached $3.438 billion, a year-on-year increase of 256%. Operating cash flow hit a record high of $4.1 billion for the same period in history.

It is reported that the revenue growth rate for this quarter is the fastest since Dell's return to the capital market in 2018, setting a new record for single-quarter revenue since its listing.

The impressive performance, coupled with the explosive market in the AI sector, led to a surge of over 32% in Dell's stock price in a single day, marking the largest daily increase since 2024. According to statistics, Dell's stock price has accumulated a gain of over 237% year-to-date. As of the latest closing, Dell's market value reached $273.4 billion, significantly leading HP and Lenovo Group in terms of market value.

So, why was Dell able to successfully "break through"?

The answer lies in this financial report.

From a business segment perspective, Dell Group's ISG (Infrastructure Solutions Group) achieved revenue of $29 billion this quarter, a year-on-year increase of 181%. Among them, AI-optimized server business revenue reached $16.1 billion, a year-on-year increase of 757%. Traditional server and networking equipment business revenue reached $8.5 billion, a year-on-year increase of 92%. Storage business revenue reached $4.3 billion, a year-on-year increase of 8%.

Notably, Dell's new AI-related orders for the quarter reached as high as $24.4 billion, and AI server backlog orders hit a record high of $51.3 billion.

Dell Chief Operating Officer Jeff Clarke stated, "The development opportunities in the AI field show no signs of slowing down."

Relying on sufficient backlog orders and optimistic market expectations, Dell raised its full-year AI server revenue forecast for fiscal year 2027 to $60 billion, a year-on-year increase of 144%.

Dell also disclosed its performance guidance, expecting revenue for the second quarter of fiscal year 2027 to be between $44 billion and $45 billion, a year-on-year increase of 49%, with a midpoint of $44.5 billion. The expected midpoint for GAAP diluted earnings per share is $4.48, a year-on-year increase of 164%, and the expected midpoint for non-GAAP diluted earnings per share is $4.80, a year-on-year increase of 107%.

In addition, Dell raised its full-year total revenue forecast for fiscal year 2027 from the previous range of $138 billion to $142 billion to $165 billion to $169 billion, with a performance guidance midpoint of $167 billion, an increase of $25 billion from the previous forecast. The full-year revenue is expected to increase by 50% year-on-year.

It is reasonable for Dell to experience a surge in valuation amidst the AI boom.

In fact, over the past year or so, the global AI infrastructure industry has continued to explode, and "shovel sellers" deeply involved in the upstream of the industry chain have become the core focus of the capital market. From NVIDIA, TSMC to Samsung, SK Hynix, and then to Micron and SanDisk, a series of chip companies have continuously delivered on their performance, and the capital market's growth expectations for them have also been fully raised. However, against this backdrop, the chip industry generally faces a significant issue of valuation overextension.

Kan Jian Finance believes that based on the current valuation status of the AI chip industry, once related companies experience a single-quarter performance that falls short of expectations, it could significantly impact the stock prices of leading companies in sectors such as storage and GPUs. Therefore, the current upward trend in the AI industry is spreading from the chip sector to the hardware sector, and Dell's valuation reconstruction is a typical microcosm of this industry trend.

From a market valuation perspective, despite Dell's significant stock price increase this year, its current dynamic price-to-earnings ratio is only 32 times, showing no significant foam (bubble). Dell Chief Operating Officer Jeff Clarke admitted that the company expects to face supply chain constraints in the second half of fiscal year 2027. Currently, apart from memory, the supply of standard computer processors, hard drives, and various supporting components is tight, becoming the main issue restricting the company's development. At this stage, insufficient supply chain capacity is the core factor limiting Dell's performance release, while market demand remains strong.

From a customer structure perspective, the number of AI collaboration customers for Dell has now exceeded 5,000, with a customer base growth rate of over 50% in the past six months. New customers mainly come from emerging cloud providers, governments of various countries, and traditional enterprises across various industries.

After the financial report was released, JPMorgan maintained its "overweight" rating for Dell and significantly raised its target price from $280 to $500. JPMorgan stated that Dell once again significantly raised its performance forecast for fiscal year 2027, and the current industry demand environment continues to significantly exceed market expectations. The company's full-year AI server revenue guidance has also been raised from $50 billion to $60 billion. Despite concerns about demand being brought forward, Dell's sufficient and rapidly growing backlog orders significantly reduce the likelihood of a rapid decline in industry demand this year.

JPMorgan further pointed out that Dell's growth is not solely reliant on the AI sector, as its traditional server and PC businesses have also seen significant recovery.

From an institutional perspective, Dell is not simply relying on AI concept hype to drive up its valuation but is experiencing Resonant type (resonant) growth across its entire business line. More crucially, amidst the continuous rise in DRAM and NAND memory chip prices and increasing upstream cost pressures, Dell has still managed to stabilize its profitability and maintain stable profit margins.

JPMorgan analysis stated that relying on its scale advantages, mature supply chain system, and industry pricing power, Dell can effectively pass on upstream raw material cost pressures to downstream customers, a core advantage significantly superior to most IT hardware peers.

Citigroup simultaneously released a research report, maintaining its "buy" rating for Dell and raising its target price from the previous $290 to $475. Citigroup stated that the core driving factor behind Dell's nearly 35% stock price surge is its better-than-expected quarterly performance and raised full-year performance guidance. Its first-quarter revenue growth of 88% year-on-year significantly exceeded the upper limit of market expectations and Wall Street's consensus forecast, coupled with scale expansion and profit margin improvement, leading to significant growth in earnings per share. The overall performance guidance fully exceeded expectations, and the current market products continue to be in short supply, providing strong support for the stability of the company's order backlog in the second half of the year.

Kan Jian Finance believes that as the global AI infrastructure construction continues to accelerate, future industry orders will continue to extend to the entire AI industry chain, and a series of traditional hardware companies are likely to continue to benefit from this round of AI industry upgrade wave.