Dell and HPE Lost Billions in a Day Over 1 Big Worry. Dell Had Already Answered It.
Dell Technologies (DELL) and Hewlett Packard Enterprise (HPE) have gone from two of the hottest stocks in 2026 to two of the year's most beaten-up names. The slide began on Oct. 14, when Barclays downgraded both stocks to “Equal Weight.” Analyst Tim Long argued that their valuations had run well ahead of any real pickup in artificial intelligence (AI) spending from regular businesses. Long also suggested that rising memory prices explained part of the recent sales strength for Dell and HPE.
Long cut his DELL stock target from $603 to $574 and cut his target for HPE from $83 to $77 per share. Dell stock fell about 11% on Oct. 14, while HPE stock dropped by around 8%. Since then, CoreWeave’s (CRWV) debt troubles have dragged the whole AI hardware group lower.
Why the AI Server Boom May Be Far From Over
The order books tell a different story. As I previously covered after their latest earnings releases, both companies posted record results last month. Dell booked a record $60.9 billion in AI server orders in the second quarter of fiscal 2027 and ended Q2 with a $95 billion backlog. At HPE, AI systems orders jumped more than 30% from the prior quarter to $2.4 billion, pushing its AI backlog to a record.
The customer list is what stands out to me. Barclays doubts that regular businesses are spending, yet Dell says it now has more than 6,500 AI server customers. About half of these have been added in just the past three quarters, and its enterprise AI customers keep growing. HPE’s bigger problem is supply, since memory shortages are slowing how fast it can turn orders into sales. As long as demand keeps outrunning supply, I think the recent selloff will look more like a pause in the AI server boom than the end of it.
About Dell Stock
Headquartered in Round Rock, Texas, Dell provides information technology and AI solutions ranging from client devices and peripherals to infrastructure solutions across servers, networking, and storage. Dell has a strong global presence across more than 180 countries with operations organized into two business units: Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG).
Dell Technologies shares have surged 194% over the past year, fueled by robust demand for AI infrastructure, increased enterprise investment in modernizing IT systems, and continued expansion of its customer base. In contrast, the S&P 500 Technology Select Sector ETF (XLK) has only gained 27% over the same period. The trend has continued so far this year as well, with DELL stock up 270% year-to-date (YTD), outperforming the exchange-traded fund’s (ETF) gain of 29%.
Dell Raises Fiscal 2027 Revenue Forecast to $192 Billion
Dell reported Q2 fiscal 2027 earnings on Sept. 1, posting record revenue of $47 billion and EPS of $7.04. In ISG, the company reported record revenue of $31.8 billion, while ISG operating income was $4.8 billion. Gross margin for the quarter was $9.9 billion, with a gross margin rate of 21.1%.
Looking forward, the company expects revenue of $49 billion at the midpoint and diluted non-GAAP EPS of $6.50 for Q3. For full-year fiscal 2027, CFO David Kennedy noted that the company raised its revenue guidance by $25 billion to $192 billion.
What Do Analysts Expect for DELL Stock?
Analysts maintain a consensus “Moderate Buy” rating on DELL stock following the sharp rally. However, Dell’s strong earnings growth, record AI infrastructure demand, and expanding backlog support further gains. Out of 28 Wall Street analysts with coverage, 17 have a “Strong Buy” rating, three have a “Moderate Buy” rating, and eight are cautious with a “Hold” rating.
About HPE Stock
Hewlett Packard Enterprise provides IT solutions to businesses and government organizations in the U.S. and around the world. HPE has become famous for providing the physical muscle behind AI processing. The company sells general-purpose and specialized servers used to run business applications and handle demanding workloads. The firm also provides data storage and hybrid cloud solutions that help businesses manage their data and run applications. Investors look to HPE not just for servers, but for high-speed connectivity. With roots tracing back to 1939, the company is headquartered in Spring, Texas.
HPE stock has performed dramatically this year, rising 144% YTD as investors started to see the company differently amid the AI boom. However, after reaching a 52-week high of $73.56 on Oct. 9, HPE stock fell to around $55 per share within a week. Currently, shares trade around the $59 mark.
HPE Raises Fiscal 2026 Guidance
Hewlett Packard Enterprise reported Q3 fiscal 2026 earnings on Sept. 2. Profitability for the quarter expanded with a non-GAAP operating margin of 16.2%, up 290 basis points sequentially. GAAP EPS came in at $1.06, while non-GAAP EPS came in at $1.11 per share. Networking revenue was $2.9 billion, up 75% YOY, while inventory was $11.8 billion at the end of Q3. HPE also exited the quarter with a net leverage ratio of 1.8 times.
Looking forward, management now expects Q4 revenue between $13.9 billion and $14.8 billion. Non-GAAP EPS for the upcoming quarter is expected to be between $1.20 and $1.30 per share. Management also raised its guidance for the full fiscal year, expecting YOY revenue growth of 34% to 37%.
What Do Analysts Think of HPE Stock?
Long downgraded HPE stock from “Overweight” to “Equal Weight” and lowered his price target from $83 to $77, remaining cautious about IT hardware companies that depend on business spending. The analyst believes valuations have risen significantly, while higher commodity prices have helped boost revenue.
Overall, Wall Street has a consensus “Moderate Buy” rating for HPE stock. Out of 21 analysts covering the stock, 10 analysts have a “Strong Buy” rating, two analysts have a “Moderate Buy” rating, and nine have a “Hold.”
On the date of publication, Jabran Kundi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.