戴尔FQ1'27：全面发力；上调盈利预期及目标价至500美元，重申跑赢大盘

Mark C. Newman+1 212 845 7822mark.newman@bernsteinsg.com April Li+1 917 344 8339april.li@bernsteinsg.com Phoebe Sun+1 917 344 8481phoebe.sun@bernsteinsg.com Price Target Dell FQ1'27: Firing on all cylinders; Increasing est and TP to $500,Reiterate Outperform Yesterday, Dell reported FQ1’27 results after the market close, shares were up 40% postmarket at time of writing on the back of strong results and guidance. Dell delivered an exceptionally strong FQ1’27,with results beating expectationssubstantially and across the board. Total revenue reached $43.8B, up 88% YoY. EPS camein at $4.86, well above the anticipated ~$3 range, as the very early stages of Agentic AI driveincreased growth in traditional servers as well as further helping AI servers. Guidance was also raised significantly as Agentic AI is opening up a completely newgrowth driver for traditional servers and the rest of company is firing on all cylinders.FY27 EPS guidance was raised from $12.9 to $17.9 and much of the upside surprise iscoming from servers (AI servers and especially traditional servers) due to more CPU needs inthe agentic future (see recent report where we explain this trendhere). Most of this strength appears sustainable due to the rise of Agentic AI.We see acombination of rising content, higher prices on like-for-like basis (due mainly to memoryprice inflation) and higher units driving the growth. And within units it is a combination ofaccelerating market demand due to the needs of agentic AI, share gains over competitors(as they struggle to get parts) and some pull-in. However, the pull in portion seems to be arelatively small portion and is already baked in the FY guidance.More reports @wechat: Hillwood2024 We increase estimates substantially across the board from a combination of pricingand units.Our FY27 and FY28 EPS is tweaked up to $18.77 and $22.84 respectively andwe believe these numbers are still conservative and are assuming a portion of strength beingdue to pull in (particularly in PCs). Investment Implications We reiterate DELL Outperform, PT = $500, which is 22x (up from 17x previously) our FY28EPS of $22.84. DETAILS Yesterday, Dell reported its fiscal Q1 27 results after the market close. Phenomenal Dell Q1’27 results - broad-based beat with revenue, margin, and EPS all coming in significantly aboveguidance and street expectations. Below is a break down of key numbers for the quarter. Revenue:Dell reported revenues of $43.8B, up 88% yoy, beat cons of $35.5B and guidance of $34.7-35.7B. •ISG posted record Q1 revenue of $29B (cons. $22.3B), up 181% yoy. ISG revenue strength is powered by both traditionalservers and AI servers.•Traditional server and networking revenue is at $8.5bn (vs. cons. $5.2bn), up 92% yoy. The majority of demand was drivenby large enterprise customers refreshing their compute environments and expanding capacities to support growingworkloads. AI inference workloads also drive incremental demand for traditional compute.•AI server revenue came at $16.1bn (vs. cons $13.1bn), up 757%.•CSG revenue came at $14.6B (vs. cons at $12.9B), up 17% yoy. Margins:1Q gross margin18.1%, beat consensus at 17.3%. Similar to last quarter, GM is pressured by mix shift to AI serversbut helped by improving storage profitability. Operating margin landed at 9.7%, up 260 bps yoy and down 90 bps qoq. •ISG posted operating margin of 10.5%, down 430 bps qoq, up 80 bps yoy. AI server operating margin hovered around midsingle digit. Storage profitability expanded due to hight mix of Dell IP. Traditional server margins remained stable.•CSG operating margin came in at 8%, up 330bps qoq and up 280bps yoy, driven by stronger commercial revenue and mix,which supported more higher-margin peripherals. Management noted they purposely moved price up earlier in Q1, whichtempered transactional demand in consumer and small/medium business segments. EPS:EPS landed at $4.86, significantly beating cons at $2.99 and guidance at $2.8-3.0. Dell also issued strong FQ2’27 and significantly revised up FY27 guidance. FQ2’27revenueis guided to be $44.5bn at the midpoint, up 50% yoy, vs cons at $35bn. ISG is expected to grow at 75% withinwhich AI server revenue expected at $15.5bn. CSG revenue is expected to be up ~20%. Q2operating incomeis expected tobe up ~80% yoy with sequential improvements in CSG operating margin.EPSis expected to be $4.7-$4.9, up 107% yoy. For FY27, Dell revised uprevenue guidancefrom $138-142bn to $165-169bn, +19% at the midpoint.EPSrevised higherfrom $12.9 midpoint to $17.9 midpoint, +39%. Operating income for FY27 is expected to grow 55%+.More reports @wechat: Hillwood2024 •The company now expects ISG revenue to grow about 80%, up from mid-40% growth projected last quarter, driven bya $10B increase in AI server revenue to $60B for FY27. Traditional server revenue saw the largest upward revision, withgrowth now projected at just over 60% YoY this quarter, versus prior guidance for mid-single-digit growth