Shares of Hewlett Packard Enterprise jumped 9.9% to $41.98 in Thursday's session, riding a wave of euphoria triggered by Dell Technologies' staggering fiscal Q1 report. Dell posted revenue of $43.84 billion, obliterating the consensus estimate of $35.45 billion, with adjusted EPS of $4.86 — nearly double the Street's $2.94 forecast. The headline: AI-optimized server revenue hit $16.1 billion, up a jaw-dropping 757% year-over-year. For HPE shareholders, the question is whether Dell's bonanza genuinely foreshadows HPE's own earnings — due June 1 — or whether this is borrowed excitement.

  • Dell's Numbers Are So Big They're Lifting the Entire Sector. Dell booked $24.4 billion in AI orders in a single quarter and raised its full-year AI server revenue target to $60 billion.

Dell now expects fiscal 2027 revenue of $165–$169 billion, far above its prior forecast of $138–$142 billion. That kind of demand signal tells the market that big tech's spending on AI infrastructure — expected to exceed $630 billion this year — is accelerating, not plateauing. HPE, as a direct competitor in AI servers and networking gear, catches that updraft by association.

  • HPE's Own Numbers Are Decent, but Much Smaller. HPE's AI backlog exceeded $5 billion in Q1, with enterprise and sovereign customers representing 64% of the order mix.

Q1 FY2026 revenue of $9.3 billion grew 18% year-over-year, with networking surging 152% to $2.71 billion following the Juniper Networks acquisition.

HPE raised its fiscal 2026 adjusted EPS guidance to $2.30–$2.50. Solid — but Dell's AI server revenue alone in one quarter was triple HPE's entire AI backlog.

  • The Margin Question Looms Over HPE's AI Story. AI demand is strong, but profitability hinges on disciplined deal selection, pricing, and execution timing.

AI server makers like HPE, Dell, and Super Micro typically face margin pressures due to costly production and rapid chip transitions.

HPE's CFO explicitly said the company is prioritizing higher-margin product orders, which "may have an impact on our AI systems revenue growth." Translation: HPE is choosing profits over top-line scale — a defensible strategy, but one that limits how much Dell's explosive growth can be extrapolated onto HPE.

  • June 1 Is the Real Test. Analysts expect HPE Q2 revenue of $9.82 billion (up ~29% YoY) and earnings of $0.54 per share (up 42%).

Citi recently raised HPE's price target to $39 from $27 — a level the stock has now blown past. At $41.98, HPE trades at roughly 18x its raised FY26 EPS midpoint, pricing in meaningful AI acceleration that management has yet to confirm.