Dell and HPE Stocks Soared After Last Earnings. Forget the Guidance Raise. This Is What Matters Most This Time.

Dell Technologies (DELL) and Hewlett Packard Enterprise (HPE) report within a day of each other this week. Dell goes first on Sept. 1, followed by HPE on Sept. 2. J.P. Morgan expects both to lift guidance again, helped by strong AI server demand and steady demand for ordinary, non-AI gear. Analysts estimate revenue of $44.5 billion and adjusted EPS of $4.92 for Dell and revenue of $11.94 billion and adjusted EPS of $0.93 for HPE. Both stocks rose sharply after their last reports, and the market is expecting more good news again. That is why I think the headline beat matters less this time around. 

Dell has already set the bar high. During its last quarterly release, it lifted the full-year revenue outlook from $140 billion to $167 billion and nearly doubled its GAAP EPS guidance to a $17.31 midpoint. Its AI backlog sits at $51 billion, with AI revenue guided to $60 billion for the year. Another raise is widely expected, and the stock is priced for it. HPE is coming off with similar momentum. In June, it posted record revenue and margins, raised its full-year outlook, and pulled its fiscal 2028 profit target forward by two full years. A lot of that comes from Juniper. HPE’s networking carries far richer margins than servers do. So Dell is the bigger growth story, while HPE is quietly building the better-quality one. 

Which one the market rewards is the real question, and I made a similar point comparing Dell with Super Micro (SMCI). The market keeps rewarding the company whose growth doesn't strain the business. Presently, the clearest sign of that strain is margins. Memory prices are climbing fast, and management at both firms has already flagged this pressure lasting into 2027. If either company raises guidance but shows margins slipping, the raise alone might not save the stock. That, even more than the headline number, is what I’ll be watching this week. 

Both Are Pricey, but One Premium Is Easier to Justify

Both stocks trade well above their own respective histories, so neither is a bargain in the usual sense. DELL trades at a forward GAAP price-to-earnings (P/E) of 26.50x, about 54% above its 5-year average. Its price-to-sales (P/S) ratio of 1.70x is even steeper, sitting 152% above its 5-year average of 0.67. HPE is also trading at a premium but is still cheaper than DELL in comparison. The forward P/E of 23.35x is 25% above its 5-year average, and the P/S of 1.54x is 95% above. The EPS trajectory is also similar, with both companies growing rapidly this year before slowing down, though Dell’s path holds up better. Analysts expect its earnings to grow roughly 83% in fiscal 2027, then hold steady at 19% to 22% through 2030. Hewlett Packard Enterprise is expected to grow 77% in fiscal 2026, slowing to 9% by 2028 before picking back up. Dell’s growth is estimated to be more even. 

The balance sheet also leans in favor of Dell. The company has a net debt of $21 billion against Hewlett Packard Enterprise’s net debt of $16 billion. On the surface, HPE looks less indebted, but Dell is more than 4 times larger in terms of market cap, making the debt far more manageable. Overall, the two stocks have plenty of similarities. Yet Dell, despite being the pricier of the two, may be the better pick on numbers. HPE has slower long-term growth expected, along with heavier relative debt, and is trading at a considerable premium as well.

AI Infrastructure Stock #1: Dell Technologies (DELL)

Dell Technologies makes computing hardware, software, and services for businesses, governments, and consumers around the world. Its work splits into two arms, one for data center gear like servers, storage, and networking, and one for PCs and accessories. Founded in 1984, it is based in Round Rock, Texas, and is still run by founder Michael Dell.

Year-to-date (YTD), DELL stock has surged about 249%, far outperforming the S&P 500’s ($SPX) 12% gain. The rally has been driven primarily by surging demand for AI servers, which pushed Dell to lift its full-year outlook considerably. Heading into its next report, the stock currently sits near its record high.

In its last quarter, Dell posted record revenue of $43.8 billion, up 88% year-over-year (YoY) and well ahead of estimates. Adjusted earnings came in at $4.86 per share, more than tripling from a year earlier, powered by $24.4 billion in AI server orders. Looking ahead, Dell guided second-quarter revenue to a range of $44 billion to $45 billion. It also raised its full-year outlook to a midpoint of $167 billion, with AI server revenue now expected to reach $60 billion.

On Aug. 31, Bank of America Securities marginally raised its price target for DELL stock from $500 to $505 and kept a “Buy” rating. The firm expects Dell to raise FY27 guidance to a range of $171 billion to $175 billion and EPS of $18.90. Overall, based on the 25 Wall Street analysts covering the stock, DELL holds a “Moderate Buy” consensus rating with a mean price target of $513.04, indicating an 18% upside.

AI Infrastructure Stock #2: Hewlett Packard Enterprise (HPE)

Hewlett Packard Enterprise builds servers, storage, networking, and cloud services for businesses and governments. Its portfolio includes data center systems, the GreenLake hybrid-cloud platform, and a networking arm. Formed in 2015 when HP split in two, it is based in Houston, Texas, and led by CEO Antonio Neri.

HPE stock has climbed 113% YTD, easily outperforming the S&P 500’s 12% rise. Most of those gains trace back to the Juniper acquisition. That deal doubled the size of HPE’s networking business and sent that segment’s growth sharply higher. The company’s raised guidance and steady AI demand have added to the momentum.

Hewlett Packard Enterprise’s latest quarter was one of its strongest in years. Revenue rose 40% YoY to $10.7 billion, and adjusted earnings of $0.79 per share more than doubled. The standout was the Networking segment, which grew 148% after the Juniper deal. HPE then raised its full-year outlook across revenue, earnings, and cash flow. The company now expects to hit long-term targets it had set for fiscal 2028 a full two years early.

Similar to Dell, on Aug. 31, Bank of America Securities also raised its price target for HPE stock slightly, going from $80 to $82, while keeping a “Buy” rating. The firm expects a strong performance again in Q3 and believes the company will beat revenue and EPS guidance. Overall, based on the 20 Wall Street analysts, HPE holds a “Moderate Buy” consensus rating with a mean price target of $68.39, indicating a 32% upside.