Dell surges 54% and HPE 59% as AI-server demand fuels hardware rally

Dell Technologies shares surged 54% and Hewlett Packard Enterprise rallied 59% over the past month as back-to-back earnings reports confirmed AI-server demand is accelerating, not slowing.

"HPE delivered an exceptional quarter with record-breaking revenue, higher-than-anticipated profitability, and increased free cash flow," Antonio Neri, chief executive officer of Hewlett Packard Enterprise, said in the company's June 1 release.

Dell set the tone on May 28 with fiscal Q1 2027 revenue of $43.84 billion, up 88% year over year, and non-GAAP diluted earnings per share of $4.86 that crushed the $2.96 consensus. AI-optimized server revenue jumped 757% to $16.13 billion, and the company booked $24.4 billion in AI orders during the quarter. HPE followed on June 1 with Q2 FY2026 revenue of $10.68 billion, up 40%, and non-GAAP EPS of $0.79 that blew past its own $0.51 to $0.55 guidance range. The company's networking segment, boosted by the Juniper Networks integration, surged 148%, while server revenue grew 33%.

The two hardware vendors are direct beneficiaries of a hyperscaler AI capex cycle that is showing no signs of easing. Dell now expects roughly $60 billion in AI-server revenue for fiscal 2027, implying 144% growth from the current run rate. HPE raised its full-year revenue growth guidance to 29% to 33% and lifted free cash flow expectations to at least $3.5 billion — pulling forward targets it had set for fiscal 2028 by two years.

Orders Double, Backlog Builds

HPE's orders more than doubled during the quarter, significantly outpacing revenue and building a record backlog. Neri addressed cancellation fears directly, saying the company sees no evidence of the double-ordering that plagued supply chains during the pandemic. "Unlike COVID, when customers were double booking, we don't see that at all," he said. "We have no cancellations."

The comment matters because it pushes back on the bear case that AI orders are inflated by panic buying. Dell's $24.4 billion in quarterly AI orders and its raised full-year guidance suggest the same dynamic: enterprise and hyperscaler customers are committing to infrastructure buildouts with multi-year visibility.

Peers Ride the Same Wave

The strength extends beyond Dell and HPE. Nvidia silicon and Super Micro Computer systems sit alongside Dell and HPE racks inside hyperscaler builds, and the entire AI-infrastructure cohort has rallied in sympathy. Marvell Technology surged about 27% after Nvidia Chief Executive Officer Jensen Huang called it the next trillion-dollar company at Computex, putting its AI networking chips in the spotlight. Broadcom gained about 5% and Qualcomm rose 5.6% as the chip rally broadened.

For investors, the key question is whether AI-server order velocity holds. Dell's next earnings report is expected in late August, with HPE's Q3 FY2026 release slated for early September. Any hyperscaler capex updates between now and then could move both names in tandem. Dell shares trade near $398, up 252% over the trailing 12 months, while HPE stock at about $50 has gained 176% over the same period. After a run of this magnitude, position sizing matters — but the structural demand story remains intact as long as the order books keep growing.

This article is for informational purposes only and does not constitute investment advice.