Jim Cramer Says One Stock Is More Important Than Nvidia Today, and It's Up 240% This Year

Dell rallied to be the “most important stock” versus Nvidia, after reporting Q2 FY27 revenue of $46.97B (+57.8% YoY, +5.69% above consensus) and adjusted EPS of $7.04 (+43.69% vs estimates). The company posted record AI momentum—$60.9B in AI server orders, $16.4B AI server revenue, and a $95B AI backlog—along with raised guidance: full-year revenue up $25B to $192B and non-GAAP EPS to $25.50. While free cash flow fell 47.22% to $986M and Dell briefly dropped 6.09% on Sep. 1, shares were up about 4.8% at the start of Sep. 2, with focus now on whether Q3 revenue guidance of $49B and the Dell vs. Nvidia P/E gap (~23 vs. ~44) continue to close.

Analysis

The market is likely still underpricing where the AI profit pool is actually being captured: not only in silicon, but in the integration layer where supply is assembled, configured, financed, and delivered. That favors DELL over the next 1-3 months because it has turned into a throughput story rather than a pure hardware story, while also pressuring smaller rack builders and white-box vendors that lack Dell’s procurement scale and enterprise distribution. Second-order beneficiaries extend to power, cooling, and networking names; the risk is that higher system demand eventually tightens component availability and compresses gross margin at the very point investors start extrapolating peak operating leverage.

The main near-term catalyst is whether management can keep converting backlog into cash without a working-capital hangover. The market should ignore the headline growth rate and focus on whether free cash flow inflects over the next 1-2 quarters; if it does not, the current rerating can stall even if revenue stays strong. For NVDA, the issue is not fundamental weakness but relative performance: its scale makes each incremental capex dollar less incremental to the stock, so a short-term rotation into the hardware enabler is plausible without changing the long-term winner in AI.

Contrarian view: consensus is treating backlog as nearly equivalent to demand, when it may partly reflect delivery timing and constrained supply. If AI infrastructure orders slow or customers start pushing out acceptance, DELL’s multiple can compress quickly because the stock is now priced for sustained execution, not just one good print. The thesis is falsified if DELL cannot improve cash conversion by the next quarter or if its AI order growth decelerates meaningfully into the next earnings window.

Key Decisions for Investors

• Buy DELL on post-earnings consolidation for a 1-3 month momentum/rerating trade; prefer entries on pullbacks rather than chasing strength. Risk/reward is attractive if the market begins valuing systems integration as the monetization layer of AI capex.
• Pair trade: long DELL / short HPE over the next 1-2 quarters as a relative-share-gain expression. Dell has the cleaner AI distribution narrative and better scale, while HPE remains more exposed to being a commodity integrator if enterprise AI spend broadens.
• Consider a tactical long DELL / short NVDA pair only if the objective is relative-value rotation, not a bearish view on chips. Keep the position small: NVDA can reassert leadership quickly if hyperscaler capex accelerates again or if new platform announcements re-rate the chip complex.
• Set a watchlist trigger on DELL free cash flow and working-capital trends in the next quarterly update; if cash generation fails to recover, cut long exposure. That is the cleanest falsifier for the bullish systems-layer thesis.