Surrounded by nervous, sweaty-palmed rivals, Dell ( DELL) still hasn't lost its cool.

Despite a slew of disappointments on the hardware side -- from weak sales at IBM ( IBM) to soft guidance from tech wholesaler Ingram Micro ( IM) -- Dell is poised to show up the competition by delivering double-digit revenue gains when it posts first-quarter results tomorrow.

Expectations for revenues of $9.5 billion imply growth of 18% from a year ago, while earnings are expected to rise to 23 cents a share, compared to 17 cents a year ago.

The only question is whether its share price gains are outrunning its admittedly impressive performance. Based on Wednesday's close of $32.25, Dell trades at 32 times forward earnings for fiscal year 2004, which began in February.

The stock has shot up 41% from its year-to-date low of $22.86 on Feb. 10.

Dell has finally broken free of its two-year trading range of $23 to $30, notes Lehman's Dan Niles. "The technicians tell us it can head higher, but fundamentally we are struggling with a valuation of over 30 times calendar 2003 earnings and sluggish IT demand," he says in a note. Niles has an equal weight rating on the shares. Lehman doesn't do banking for Dell.

"The trends in the hardware business clearly favor Dell and it's probably the best-positioned company in the world where standards matter more than the best features," says Marty Shagrin, an analyst at Victory Capital Management, which has holdings in the stock. "There's plenty of market share for them to take in both PCs and enterprise. The question just becomes one of, what do you want to pay for that earnings strength?"

Victory hasn't trimmed its holdings, however, nor has it added to its position, he says. The ( SRVEX) Victory Diversified Stock fund has 2% of its assets in Dell, according to Morningstar. "We debate every day what their proper valuation should be. We're not sure if tech demand is going to get worse, but it isn't a foregone conclusion that things will be that much improved in the back half of the year," says Shagrin.

One hedge fund analyst attributes the recent surge in Dell's price to seat-of-the-pants performance-chasing. "We've had a pretty good run in tech stocks recently and I get the sense a lot of portfolio managers are trying to catch up and chase performance, buying without a lot of regard toward growth drivers and valuation," says the analyst.

That's not to say the company can't deliver the goods. "I think the outlook will be OK, though fairly cautious," says the analyst. "In John Chambers-speak, I think they'll do a good job on things they can control. I think we'll walk away from the conference call feeling pretty good about the company and pretty worried about the environment."

Wall Street expects the company to guide for sequential revenue growth of 2.4% in the second quarter now under way, according to Thomson First Call.

One risk to that outlook is potentially weak sales from the government/education sectors. At between 15% to 20% of U.S. sales, education spending is typically the biggest driver of sequential growth in the July quarter, says Steve Milunovich of Merrill Lynch. "The state and local budget crises make this a key wild card for the quarter," he says in a note. Merrill hasn't done banking for Dell.

Some put a more positive spin on the outlook. "While on its quarterly call, we think Dell may repeat the view that it sees no signs of a broader IT recovery, we believe PC market trends have actually been exhibiting signs of a soft recovery," says Robert Cihra of Fulcrum Global Partners in a note. "After all, following a 4% decline in 2001, we estimate broader PC market units were up 3% in 2002 and expect to be up 6% in 2003. We are not calling for some hopeful 'second-half recovery,' rather a continuation in underlying PC recovery trends we believe are already in place."

Cihra, who has a buy rating on the stock, says he's "sticking with his belief that corporate PCs and low-end servers/storage will lead any IT recovery, putting Dell in the sweet spot." Fulcrum doesn't do investment banking.

Few would dispute Dell's share-grabbing prowess. In the first quarter Dell grew its share of the global PC market to 16.9% measured in unit shipments, up from 14.3% last year, according to Gartner; meanwhile No. 2 vendor Hewlett-Packard ( HPQ) lost share and IBM was only able to hold shares flat.

In servers, Dell upped its share to 20.2% from 17.5% last year. That puts it in the No. 2 spot behind H-P, which lost share in the same period.