Jim Cramer Couldn’t Stop Gushing About This Computer Hardware AI Stock

Dell Technologies Inc. (NYSE:DELL), a prominent computer hardware firm, reported a 15.8% increase in its shares following its second fiscal quarter earnings report. The company posted revenue of $47 billion, surpassing analysts' expectations of $44.9 billion. Impressive growth was seen in both revenue, which increased by 58% year-over-year, and earnings, which grew by 203%.

Dell also raised its full-year revenue guidance to $192 billion from $167 billion and its earnings guidance to $25.50 per share from $17.90 per share. The tech investor, Jim Cramer, expressed his elation about the results on Twitter, calling Dell an "unbelievable" stock. He was so enthusiastic about the company that he even predicted it could soar up to 100%.

Dell Technologies Inc. plays a significant role in the AI buildout due to its expertise in creating AI servers. Consequently, investors have been increasingly optimistic about the firm. The latest quarter demonstrated a remarkable 203% earnings growth, a 100% growth in AI-related server revenue, and a $95 billion AI server backlog.

This backlog record also provides valuable insight into the company's potential earnings over the next six quarters, as 70% to 80% of it is convertible to revenue in FY27 and FY28. Despite the impressive growth, Dell's operating margin remained flat at 11.5%, which suggests that the gains were not yet translating into bottom-line profits.

Additionally, the company's operating cash flow decreased by 13% in the second quarter. The high valuation of Dell Technologies Inc., with a forward P/E ratio of 23.15, compared to peers Super Micro (9x) and HP (13), might also warrant further scrutiny. Hedge fund interest in Dell is moderate, with 77 funds holding a stake in the company during Q2, positioning it between Super Micro and HP in terms of the number of hedge funds involved.