The Market Is Closing The Gap Between Hewlett Packard And Dell and SanDisk. Who Wins?
Hewlett Packard Enterprise asks investors to pay a premium for its future, but cheaper rivals are already delivering faster growth today.
Hewlett Packard Enterprise (HPE), Dell, and SanDisk (SNDK) offer three distinct paths into the enterprise hardware market, but investors are paying a notable premium for one. The market currently charges 25.8 times operating income for HPE, while asking just 23.8 times for Dell and 20.7 for SanDisk. The complication is that both peers are growing faster. This raises a direct question for any current or prospective HPE shareholder: what exactly is that premium buying? The valuation gap between HPE and Dell has narrowed over the past year, suggesting the market has already started to question the price. The live issue is whether that repricing has further to run.
HPE’s premium buys a large AI order book.
The case for HPE rests on the future it is building, not the numbers it just posted. Management argues that AI has become a “multiyear growth driver” that is fueling demand across its entire portfolio. The company recently booked more orders than in any prior quarter, resulting in a “record-breaking backlog.” The company substantiated this claim by raising its outlook for fiscal 2027, now expecting consolidated revenue to grow 13.0% to 17.0%. This momentum is powered by the integration of Juniper Networks, which management says is “ahead of schedule” and helping to win key deals, such as an expanded collaboration with Oracle to build out AI infrastructure.
This is the core of the bull case: investors are paying for a company successfully executing a strategic pivot into higher-demand areas. The record backlog and strong forward guidance are presented as proof that the strategy is working, even if it comes at a higher current price to operating income.
The key numbers side by side, today:
| Metric | HPE | DELL | SNDK |
|---|---|---|---|
| P/OpInc* | 25.8x | 23.8x | 20.7x |
| LTM OpInc Growth | 61.4% | 103.1% | 2359.2% |
| 3Y Avg OpInc Growth | 12.7% | 46.1% | 797.0% |
| LTM Revenue Growth | 26.6% | 49.0% | 175.3% |
| 3Y Avg Revenue Growth | 12.8% | 19.2% | 68.4% |
OpInc = Operating Income, P/OpInc = Price To Operating Income Ratio
And the same comparison exactly a year ago, so you can see which way the mismatch has been moving:
| Metric | HPE | DELL | SNDK |
|---|---|---|---|
| P/OpInc* | 15.5x | 12.2x | 27x |
| LTM OpInc Growth | -10.4% | 18.3% | 96.4% |
| 3Y Avg OpInc Growth | 1.4% | 9.9% | -7.4% |
| LTM Revenue Growth | 14.0% | 10.5% | 13.2% |
| 3Y Avg Revenue Growth | 5.9% | -1.3% | 4.6% |
OpInc = Operating Income, P/OpInc = Price To Operating Income Ratio
The cost is forgoing cheaper, faster-growing rivals.
By paying HPE’s premium, an investor gives up significant, demonstrated performance from its peers. Dell Technologies (DELL) is not only cheaper but grew revenue by 49.0% over the last twelve months, compared to 26.6% for HPE. Dell also operates with a higher operating margin and recently raised its own forward guidance. The company continues to innovate, recently introducing a new product, the first in its premium line designed for Gemini Intelligence. Recent analysis has explored what has changed in Dell’s story, and its current performance presents a sharp contrast.
The trade-off is even more stark with SanDisk. It is the cheapest of the three peers and posted huge revenue growth of 175.3% over the last year, alongside a large 61.6% operating margin. SanDisk is not resting on this performance; it recently announced plans to invest over $31 billion in Japan with a partner company to extend its leadership in the memory industry.
The choice turns on converting orders into revenue.
The decision between HPE and its peers comes down to execution. HPE has built a strong story around its future growth, backed by a record backlog. Its rivals, however, offer superior growth and profitability right now, at a lower valuation. The entire premise of HPE’s premium rests on its ability to convert its historic order book into actual sales and profits, a process management admits is hampered by ongoing “supply constraints.”
The clearest test of this will be in the company’s networking segment. After seeing orders grow 3.5 times faster than revenue, management has guided for networking revenue to grow 11% to 13% in the coming quarter. Hitting or exceeding that target would be a tangible sign that the company is starting to close the gap between its promises and its results. Until then, investors are weighing a story of future potential against the proven, cheaper performance of its rivals.
Want To Stack Them Up Side By Side Yourself?
You can line Hewlett Packard and Dell and SanDisk 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. Or, if you would rather own the whole group than choose between them, our ETF Scorecard shows how the technology funds stack up.
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