Dell Technologies DELL and Hewlett Packard HPE are well-known providers of server and enterprise solutions market, focusing on artificial intelligence (AI)-driven infrastructure and cloud computing. DELL is growing its presence in the server market through its PowerEdge servers, while HPE is expanding its footprint in the server market through its ProLiant Servers and GreenLake platform.

Per IDC’s latest data, the AI infrastructure market is poised to surpass $200 billion in spending by 2028. Investments in AI servers have been a key catalyst, and with strong continued spending, both DELL and HPE are well-positioned to capitalize on this massive growth opportunity.

Hence, investors should ask the question: Which of these server giants has the greater upside potential? Let’s find out.

The Case for DELL Technologies Stock

Dell Technologies is benefiting from the strong demand for AI servers, which are driven by ongoing digital transformation and heightened interest in generative AI applications. Its PowerEdge XE9680L AI-optimized server is very much in demand. Strong enterprise demand for AI-optimized servers is aiding Dell.

Dell PowerEdge supports the NVIDIA Blackwell Ultra platform, including the upcoming NVIDIA HGX B300 NVL16, NVIDIA GB300 NVL72 and NVIDIA RTX PRO 6000 Blackwell Server Edition.  The new Dell PowerEdge XE8712 server features the GB200 NVL4 platform and supports up to 144 NVIDIA B200 GPUs per Dell IR7000 rack. These liquid-cooled systems are tailored for AI model training and complex HPC simulations.

In the fourth quarter of fiscal 2025, DELL’s AI-optimized server momentum saw an increase of $1.7 billion in orders.  The company shipped $2.1 billion worth of AI servers in the fiscal fourth quarter, and the AI server backlog remained healthy at $4.1 billion.

DELL is benefiting from an expanding partner base that includes NVIDIA, Microsoft, Meta Platforms and Imbue. In March, Dell and NVIDIA expanded their AI Factory collaboration, introducing new AI PCs, infrastructure, software, and services to accelerate enterprise AI adoption across various scales.

The Case for Hewlett Packard Stock

Hewlett Packard is benefiting from robust demand for its AI-optimized servers, leading to significant revenue growth in its server segment. In the first quarter of fiscal 2025, HPE’s server business grew 30% year over year, reaching $4.3 billion, highlighting the continued strength of its server offerings.

HPE’s ProLiant server line is one of the most widely used in the enterprise sector and has been a key catalyst. In the first quarter of fiscal 2025, HPE launched its ProLiant Gen 12 server platform, which is expected to enhance server performance with improvements in quantum-resistant security and direct liquid cooling.  This generation also offers energy efficiency, replacing up to 26 Gen9 servers and up to 14 Gen10 servers, reducing power consumption by at least 65%. This launch is expected to further strengthen HPE’s competitive position in the server market.

One key driver of HPE’s success in the server market is its robust demand environment for its edge-to-cloud platform, GreenLake. The HPE GreenLake cloud product remained a key differentiator, achieving significant growth in annual recurring revenue (ARR), which surpassed $2 billion, a 46% increase year over year. In the first quarter of fiscal 2025, more than 41,000 enterprises were using HPE GreenLake Cloud.

Stock Price Performance and Valuation of DELL vs. HPE

Year to date, DELL Technologies and Hewlett Packard shares have plunged 34.9% and 37.6%, respectively. HPE’s recent drop in the share price is largely due to broader market weakness. Investor sentiment has soured amid rising trade tension, with additional tariffs raising fears of escalating costs.

DELL and HPE Stock Performance

Image Source: Zacks Investment Research

Valuation-wise, DELL and HPE’s shares are cheap, as suggested by a Value Score of B and Value Score of A, respectively.

In terms of forward 12-month Price/Sales, DELL’s shares are trading at 0.5X, lower than HPE’s 0.52X.

DELL and HPE Valuation

Image Source: Zacks Investment Research

How Do Earnings Estimates Compare for DELL & HPE?

The Zacks Consensus Estimate for DELL’s fiscal 2026 earnings is pegged at $9.34 per share, which has remained unchanged over the past 30 days. This indicates a 14.74% increase year over year.

However, Zacks Consensus Estimate for HPE’s fiscal 2025 earnings is pegged at $1.94 per share, which has declined 7.6% over the past 30 days. This indicates a 2.51% decline year over year.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Conclusion

DELL’s robust portfolio and expanding partner base are key drivers that make the stock attractive for long-term investors. However, HPE is facing challenges related to rising costs due to tariff hikes and regulatory hurdles in the acquisition of Juniper Networks, delaying the process and raising the cost of acquisition.

Currently, Dell Technologies has a Zacks Rank #3 (Hold), making the stock a stronger pick than Hewlett Packard, which has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

Dell Technologies Inc. (DELL) : Free Stock Analysis Report

Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research