Own Hewlett Packard For AI? Dell’s Order Book Demands A Look

Dell’s massive, locked-in AI backlog makes it the cleaner way to own the server boom, while a pricier HPE asks investors to bet on a turnaround still taking shape.

If you own shares in Hewlett Packard Enterprise (HPE) or Dell Technologies (DELL), you are making the same fundamental bet: that the corporate rush to build out AI infrastructure is a durable, multi-year boom. These are two of the most direct ways to get exposure to the surging demand for the servers, storage, and networking that power modern data centers.

Both stocks have delivered spectacular returns recently, but a sharp divergence has opened up. The question for any investor is which one offers the smarter path forward from here. On the surface, both companies just posted blowout quarters. But when you look at the one metric that matters most for the future, the actual, booked-and-paid-for order backlog, a stunning gap appears. And counterintuitively, the company with the far larger backlog is also the cheaper stock.

The Forward Signal: Both Raised Guidance, But The Scale Differs

Decisions are about the future, and the cleanest forward signal is a company’s own forecast. At their latest reports, both HPE and Dell raised their outlooks, a clear sign of confidence. HPE now expects to hit its long-term financial targets two years ahead of schedule, a significant acceleration.

Dell, however, is operating on another level of scale. Its management raised its full-year revenue guidance by roughly $27 billion, a staggering revision driven by what it sees as durable, broad-based demand. While both signals are positive, Dell’s is a tidal wave. Its executives see pipelines that have “never been healthier” and are “growing at greater than historical rates.”

The AI Backlog: Where The Real Gap Appears

The most concrete measure of future business is the backlog of orders waiting to be fulfilled. This is where the choice between the two companies becomes clearest. HPE reported strong momentum, booking $1.8 billion in new AI systems orders and growing its cumulative bookings to $16.4 billion. It entered the third quarter with an AI systems backlog of $5.9 billion.

Dell’s numbers eclipse that entirely. In its last quarter alone, Dell booked $24.4 billion in AI orders, more than HPE’s entire cumulative total. It ended the quarter with a record AI backlog of $51.3 billion. That is nearly nine times the size of HPE’s. This is not a forecast or a hope; it is a mountain of secured future revenue that provides a powerful degree of visibility.

Why Is The Faster Grower Cheaper?

Here is the twist. Despite its colossal backlog and faster recent growth, Dell is the cheaper of the two stocks. Dell trades at a price-to-operating-income multiple of 22.6, while HPE trades at 27.7. The trailing numbers confirm this story of superior execution: Dell grew revenue 38.6% over the last twelve months versus 22.6% for HPE, runs on higher operating and net margins, and carries a lighter debt load.

In this case, the past performance and valuation do not point to a value trap. They confirm the forward story told by the order book: Dell is capturing a dominant share of the current AI infrastructure buildout, and doing so more profitably.

The Tradeoff: Proven Scale vs. A Turnaround Play

This does not make HPE a bad company, but it frames the investment as a different kind of bet. The bull case for HPE centers on its strategic acquisition of Juniper Networks, which it is integrating to create a more powerful, converged networking and AI player. Its networking business is showing strength, with campus and branch orders growing in the “upper 20% range.” An investment in HPE today is a bet that this turnaround and integration will unlock value and help it close the gap with larger rivals.

The risk with Dell is whether this incredible demand is sustainable. On its earnings call, analysts repeatedly questioned if customers were simply pulling forward future orders to secure scarce components. Management acknowledged there is a “pull in component” to the demand surge. An investor in Dell is accepting the risk that this boom may be cyclical and is underwriting a stock that, despite its relatively cheaper valuation, has already had a massive run.

Want To Stack Them Up Side By Side Yourself?

You can line Hewlett Packard and Dell up directly on the Hewlett Packard peer comparison, weigh them on valuation, growth, margins, and returns, and swap in any other Technology Hardware, Storage & Peripherals names you hold.

Asking that question of one pair is easy. Asking it of every stock you own, and re-asking it each quarter as the numbers move, is the part almost nobody keeps up with, and it is exactly where most portfolios quietly fall behind the market.

The 30 Stocks That Already Pass This Test

Now imagine skipping the work entirely and simply holding the names that already clear this bar: the strongest forward setups at the most reasonable prices, screened, picked, and sized for you.

That is the Trefis methodology. The Trefis High Quality (HQ) Portfolio scores quality across thousands of names, holds the 30 strongest, and rebalances on rules, not gut feel. It has outpaced a benchmark that combines all major indices – the S&P 500, S&P Mid-cap, and Russell 2000.