Dell and HP Soar as Lenovo Blows Past Expectations, Cisco Falls

Hardware stocks Dell and HP are seeing significant premarket moves on Thursday, with both companies up by double digits. Dell is indicated to rise 4% while HP has climbed 6%. In contrast, Cisco Systems is down 7%. The divergence in stock prices can be attributed to two separate catalysts: Lenovo's blowout quarter overnight and Cisco's own fiscal fourth-quarter results after Wednesday's close.

Lenovo reported quarterly revenue up 43%, its fastest growth in five years and a record high for the group, with server turnover doubling due to an AI infrastructure boom. The company's shares jumped roughly 20% and hit a record high, beating expectations on robust AI demand. Lenovo's growth is significant as it competes head-to-head with HP Inc. in PCs and with Dell in both PCs and AI servers.

The bear case on PC makers this year has been memory cost inflation. However, Lenovo's 43% growth suggests that AI-driven server and premium PC demand is more than offsetting component cost pressure. This is a bullish sign for both peers. In contrast, Cisco's fiscal fourth-quarter results were strong, with revenue up 18% to $17.25 billion and Adjusted EPS increasing to $1.22 from $0.99 a year ago.

Despite the beat and raise, Cisco shares are down 7% premarket due to positioning going into earnings. The stock has surged nearly 61% this year as of Wednesday's close, making a beat and raise largely priced in. Additionally, services revenue was flat year over year at $3.79 billion, short of FactSet-polled consensus.