Betting On AI Hardware: Is HPE Or Dell The Better Way?
Hewlett Packard Enterprise (HPE) and Dell Technologies (DELL) are bought for the same thing right now: demand for the hardware that fills AI data centers. Both say customers want more than they can supply. Yet they earn from that demand differently. Dell’s growth is coming from AI servers, while HPE’s management says the company is becoming a networking company. What has each company just told investors about that demand?
What Dell And HPE Each Told Investors In September
Both companies told investors to expect more, but the two raises are not the same kind of news. On September 1, 2026, Dell lifted its fiscal 2027 revenue guide to $192 billion at the midpoint, from $167 billion. Dell’s guide for AI server revenue went up as well, to $74 billion from $60 billion.
HPE followed a day later. It now expects fiscal 2026 revenue to grow 34% to 37%, up from the 29% to 33% it guided before. But HPE’s management also said it expects its operating margin to fall in the fourth quarter from the previous quarter. The main reasons it gave were pricing and a bigger share of AI systems in its Cloud & AI business.
So Dell’s news was more AI servers, and HPE’s was a better year with a lower operating margin to come.
How Do Dell And HPE Earn From AI Demand?
Dell earns from AI demand through volume. Dell booked $60.9 billion of AI orders in fiscal Q2 2027 and ended the quarter with a $95 billion AI backlog. Dell protects its profit through that scale: management listed operating leverage at scale first among the reasons earnings grew faster than revenue. Dell expects operating expenses of about 8% of revenue for fiscal 2027.
HPE’s profit comes more from what it sells than from how much. Management credited a record adjusted gross margin of 40% in fiscal Q3 2026 to pricing on traditional servers and a bigger share of networking sales. Management expects that margin to come down as AI systems grow and traditional servers normalize, offset by a growing share of networking. HPE is also short of parts: management said its networking orders are growing 3.5 times faster than its networking revenue, and blamed supply.
Dell Is Ahead Of HPE On Most Measures
Dell is growing faster than HPE, keeps more of each sales dollar as profit and has less debt against its market value. Over the past twelve months, Dell’s operating margin was 9.6%, and HPE’s was 7.8%. Dell’s revenue grew 49% in that time, against 27% for HPE. HPE’s debt equals 22% of its market value, while Dell’s equals 9.7%. And you pay about the same for either company’s profit: HPE trades at 32.7 times trailing earnings and Dell at 31.3.
HPE is ahead on one measure: its stock is a little cheaper against sales. HPE is priced at 2.2 times sales and Dell at 2.4. On forecasts, the two are close. HPE raised seven of its eight main forecasts at its latest report, while Dell raised all four of its own.
So Dell comes out ahead on most of these measures, at nearly the same price for its earnings. HPE’s supply is the one thing that could change the comparison. HPE guided fiscal Q4 2026 revenue of $13.9 billion to $14.8 billion. Revenue above the top of that range would be one sign that HPE’s supply is starting to catch up with its orders.
How To Act On HPE?
Now you know HPE better. And that’s our purpose: to make you informed before you invest your money. However, making a bet on a single stock carries its own risks.
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