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<\/a> Zacks Investment Research <\/p>\nImage Source: Zacks Investment Research <\/p>\n
HPE’s fiscal Q3 was impressive as well, with record revenue rising 34% to $12.21 billion and topping estimates of $12.09 billion. On the bottom line, HPE’s Q3 adjusted EPS climbed to a quarterly peak of $1.11 from $0.44 a year ago and beat expectations of $0.95 by nearly 17%. <\/p>\n
Cloud & AI revenue rose 25% to $9 billion, including a 35% increase in server revenue to $6.8 billion. More impressively, Networking revenue jumped 75% to $2.9 billion, attributed to the integration of Juniper Networks, which HPE acquired last year for $14 billion. <\/p>\n
HPE now expects Q4 revenue of $13.9-$14.8 billion and adjusted EPS of $1.20-$1.30. It’s also noteworthy that management raised its full-year revenue growth forecast to a range of 34%-37% and adjusted EPS guidance to $3.75-$3.85 (+5% YoY growth). Plus, HPE’s FY27 framework calls for another 13%-17% revenue expansion and 16%-20% EPS growth. <\/p>\n
Story Continues <\/p>\n
Image Source: Zacks Investment Research <\/p>\n Major Players in a Booming Server Market <\/p>\n The long-term opportunity may be even more compelling. As shown in the chart below, Grand View Research estimates that the global server market expanded from $205 billion in 2021 to $342.1 billion in 2025 and projects it to reach nearly $1.03 trillion by 2033. <\/p>\n That represents a robust 14.8% compound annual growth rate (CAGR) from 2026 through 2033 and would roughly triple the market from 2025 levels. <\/p>\n Image Source: Grand View Research <\/p>\n Such growth should provide a significant runway for major server vendors like Dell and HPE as AI and machine-learning workloads, edge computing, cloud expansion, and increasingly demanding data-center infrastructure requirements fuel server investment. <\/p>\n Dell and HPE are firmly entrenched in this opportunity. To that point, the International Data Corporation (IDC) recently reported that worldwide server revenue reached $122.6 billion in Q1 2026 alone, rising more than 30% YoY as GPU-rich AI systems and hyperscaler investment drove spending. <\/p>\n IDC’s Q1 data placed Dell first among named server original equipment manufacturers (OEMs) with a 16.5% worldwide revenue share, while HPE remained among the five largest vendors at 3%. <\/p>\n Of course, Dell’s much larger position gives it the advantage in AI-server scale. That said, HPE’s combination of ProLiant servers, storage, GreenLake hybrid cloud services, and Juniper networking creates an increasingly comprehensive enterprise infrastructure platform. <\/p>\n Further strengthening their AI prospects, both Dell and HPE have extensive partnerships with Nvidia NVDA), integrating the chip giant’s accelerated computing technology into their respective AI factories and private-cloud infrastructure platforms. <\/p>\n Performance & Valuation Comparison <\/p>\n Year to date, Dell shares have skyrocketed more than 320%, while HPE has climbed over 120%. Over the last three years, DELL has surged +630%, compared with a still-impressive +215% gain for HPE. <\/p>\n Image Source: Zacks Investment Research <\/p>\n Despite Dell’s superior stock performance, HPE has the clear advantage on traditional valuation metrics. <\/p>\n HPE is trading at roughly 17X forward earnings, compared with around 20X for Dell, while their forward price-to-sales multiples are approximately 1.5X and 1.7X, respectively. <\/p>\n Keeping that in mind, Dell’s premium doesn’t look excessive considering management is forecasting 69% FY27 revenue growth, 148% adjusted EPS growth, and a tripling of AI-server sales. <\/p>\n Still, HPE offers the greater valuation cushion, although Dell’s extraordinary earnings expansion and substantially larger position in AI servers help justify paying more for its shares. <\/p>\n Image Source: Zacks Investment Research <\/p>\n Bottom Line <\/p>\n After their latest reports, Dell gets the slight edge as the better buy for investors seeking maximum exposure to the AI infrastructure boom. <\/p>\n Its massive AI-server backlog, market-leading OEM position, stronger near-term growth, and sharply raised outlook outweigh its valuation premium, especially considering DELL still trades beneath the price-to-earnings and sales valuation of the benchmark S&P 500. <\/p>\n HPE shouldn’t be overlooked, however, as its cheaper valuation, rapidly growing server business, Juniper-enhanced networking portfolio, and expanding hybrid-cloud exposure provide an attractive alternative for value-oriented investors. <\/p>\n Most encouragingly, Dell Technologies and Hewlett Packard Enterprise stock both currently sport a Zacks Rank #1 (Strong Buy), indicating earnings estimate momentum remains firmly in their favor and could lead to even more upside. <\/p>\n Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report<\/a> <\/p>\n Dell Technologies Inc. (DELL) : Free Stock Analysis Report<\/a> <\/p>\n Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report<\/a> <\/p>\n NVIDIA Corporation (NVDA) : Free Stock Analysis Report<\/a> <\/p>\n This article originally published on Zacks Investment Research (zacks.com).<\/a> <\/p>\n