The Market Is Closing The Gap Between Hewlett Packard And Dell and SanDisk. Who Wins?
Hewlett Packard Enterprise commands a premium price over its faster-growing rivals, but the market has already started to question if that price is justified.
For investors in the enterprise hardware space, Hewlett Packard Enterprise (HPE), Dell, and SanDisk (SNDK) offer three distinct paths to own the industry’s growth. Yet the market is charging a premium for one of these paths, and it is the one with the slower recent growth. The question an HPE investor must ask is what, exactly, that premium is buying. The market has already begun to close the valuation gap between HPE and Dell over the past year, putting the durability of HPE’s premium on trial right now.
HPE’s premium is the price of a large order book.
The case for paying more for HPE rests on future potential, not past performance. Management describes a company experiencing a historic demand surge, driven by an enterprise AI “inflection point.” This has resulted in a “record-breaking backlog for the company,” with a pipeline that management says remains “multiples of our backlog.” Beyond waiting for orders, the company is raising its outlook, now expecting consolidated revenues to grow 13% to 17% in fiscal 2027.
The strategic acquisition of Juniper Networks appears to be a key part of this story. Management reports the integration is “ahead of schedule” and is already helping to win significant business, including an expanded collaboration with Oracle to build out gigawatt-scale AI infrastructure. This positioning is the argument for the premium: that the current valuation is an investment in a company poised to convert a historic backlog into a new era of profitable growth.
The key numbers side by side, today:
| Metric | HPE | DELL | SNDK |
|---|---|---|---|
| P/OpInc* | 25.5x | 24.1x | 20.2x |
| 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* | 15.4x | 12.5x | 32.5x |
| 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
Cheaper peers are already delivering faster growth.
By paying HPE’s premium, an investor forgoes the combination of faster growth and a lower price offered by its rivals. Dell Technologies (DELL) trades at a lower price to operating income multiple of 24.1, versus 25.5 for HPE. It also grew revenue 49.0% over the last twelve months, far ahead of HPE’s 26.6% growth. Dell is not standing still; it recently raised its forward guidance and is pushing into new areas with new products, including its first laptop built for Gemini Intelligence.
SanDisk presents an even starker contrast. It is the cheapest of the three, trading at 20.2 times operating income, and its revenue growth over the last year was a huge 175.3%. The company is making major strategic moves to secure its future, recently announcing plans with a partner company to invest over $31 billion in Japan to extend their leadership in the memory industry. Both Dell and SanDisk offer investors a way to own the sector’s momentum for a lower price per dollar of profit, with more demonstrated top-line speed.
The choice turns on converting orders into cash.
Yet the entire argument for HPE’s premium hinges on execution. Management acknowledges the challenge, stating that “supply constraints continue to affect our ability to fulfill the increased customer demand,” putting the company’s ability to convert its record backlog into actual revenue under a microscope. The durability of HPE’s premium now rests on its ability to convert that backlog into its guided revenue growth for fiscal 2027 of 13.0% to 17.0%.
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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