Dell vs. HPE: Which AI Infrastructure Stock Offers the Better Opportunity Now?

Demand for AI infrastructure is rising sharply as companies push model training and inference workloads in-house or via hybrid clouds. Hardware vendors that provide servers, storage, and networking are now under close scrutiny by investors. In recent weeks, Dell raised its long-term growth forecast from 3 – 4% to 7-9% annually, citing “surging demand for its AI-capable servers.”

In this environment, competition is intensifying among infrastructure players. Buyers are placing large orders for AI systems built around the latest GPUs. At the same time, supply constraints, especially for Nvidia accelerators, are creating bottlenecks. 

For enterprise IT decision makers, the question is no longer whether to adopt AI infrastructure, but which vendor can deliver the right balance of scale, reliability, product integration, and margin stability.

Dell’s Position

Dell enters this AI infrastructure race with several clear advantages. Its Infrastructure Solutions Group (ISG), responsible for servers, storage, and networking, is benefiting directly from demand. In Q1 of its fiscal 2026, Dell recorded $12.1 billion in AI orders, exceeding its total AI shipments for the previous year. The ISG also posted double-digit growth, and Dell expects AI server shipments of $20 billion by 2026.

A major strength for Dell lies in its scale and customer reach. It already maintains deep relationships with large enterprise IT buyers, cloud providers, and government customers. In several recent deployments, Dell has provided servers for CoreWeave’s AI offerings and Elon Musk’s xAI. 

Also, Dell recently launched new AI servers powered by Nvidia’s Blackwell Ultra chips in both air-cooled and liquid-cooled versions, with support for high GPU density configurations.

Dell’s management is explicitly reframing the company from a legacy hardware vendor to an AI infrastructure leader. At its October analyst event, Dell nearly doubled its earnings growth target to at least 15% annually, up from around 8 percent. It also raised its expectations for ISG’s compound growth rate to 11-14 percent.

However, Dell’s position is not without challenges. It currently carries an order backlog of roughly $14.4 billion in AI-optimized servers, which underscores demand but also exposes the company to timing and supply risks. Supply of high-end GPUs and high-bandwidth memory remains constrained. 

Dell executives acknowledge that demand will remain “nonlinear,” meaning it may fluctuate sharply quarter to quarter. Margin pressure is a real concern, as rising component and logistics costs could erode profitability if Dell must absorb inflation or discount aggressively to win deals. 

Dell’s positioning leans toward strength in mass scale and deployment capability. Its goal is not only to sell compute nodes but to deliver an AI factory stack combining servers, storage, networking, and services. Its success will depend on whether it can sustain margins, manage supply constraints, and convert large AI orders into profitable, delivered systems rather than merely booked revenue.

HPE’s Position

Hewlett Packard Enterprise (HPE) has taken a more software-oriented approach to AI infrastructure, focusing on integrating data, storage, and compute into unified systems that can be delivered through its GreenLake platform. The company’s AI Systems division, launched in early 2024, has become one of its fastest-growing segments. 

In its latest quarterly results, HPE reported $900 million in AI Systems revenue, more than double the previous quarter. HPE credited the surge to growing demand for private and hybrid AI deployments, particularly among customers who prefer on-premises control over data.

A cornerstone of HPE’s strategy is its partnership with Nvidia, through which it has developed “AI Factory” solutions. These pre-validated systems integrate Nvidia’s GPUs, networking, and software with HPE’s storage and compute hardware. The partnership enables customers to deploy high-performance AI clusters more easily and with predictable performance benchmarks.

Unlike Dell, which leans heavily on scale, HPE emphasizes flexibility and recurring services. Its GreenLake model allows customers to pay for infrastructure on a usage basis, blending hardware sales with subscription-like revenue streams. 

This approach helps stabilize earnings while appealing to enterprises that want to avoid large capital expenditures. The company has also expanded its edge computing offerings, targeting industries such as telecom and energy, where real-time AI inference near the data source is critical.

However, HPE’s smaller scale limits its ability to match Dell’s volume economics. The company faces integration challenges following acquisitions like Juniper Networks, which it purchased to strengthen its networking portfolio. Although the deal supports HPE’s long-term goal of offering a complete data-to-cloud platform, it may weigh on near-term margins and operational focus. 

Side-by-Side

Both Dell and HPE are benefiting from AI infrastructure demand, but they represent distinct investment profiles. Dell offers greater near-term revenue scale, reporting a market capitalization of roughly $100 billion and double-digit AI server order growth. HPE, by comparison, is valued near $25 billion, with faster percentage growth but smaller absolute exposure to AI servers.

In terms of product mix, Dell focuses on broad enterprise deployments and hyperscaler orders, while HPE emphasizes private AI and data-center optimization. Dell’s strength lies in standardized AI servers, high GPU density, and a global distribution network. HPE differentiates itself through integrated hardware-software stacks and flexible financing via GreenLake.

Valuation multiples tell a similar story. Dell trades at a forward P/E of around 17, reflecting confidence in its scalability and profitability, while HPE’s forward P/E near 12 indicates more modest growth expectations. 

Analysts generally view Dell as a short-term growth play driven by hardware demand, and HPE as a steady, lower-volatility option with a growing software and services base.

Both companies face overlapping risks. Supply shortages of Nvidia GPUs could delay deliveries and revenue recognition. Macroeconomic slowdowns could also reduce enterprise spending on large AI clusters. Dell must manage its sizable backlog, while HPE needs to prove that its software-driven approach can translate into consistent profit expansion. The next few quarters will reveal whether scale or specialization proves the more durable strategy in the AI infrastructure market.

Conclusion & Investor Takeaways

Both Dell and HPE are positioning themselves at the center of the AI infrastructure boom, yet their investment appeals differ. Dell offers stronger scale, faster revenue growth, and broader enterprise demand, making it suitable for investors seeking exposure to high-volume AI hardware deployment. 

HPE, on the other hand, provides a steadier path through recurring services, edge computing, and software-driven systems that appeal to more conservative investors. 

Near-term performance will depend on GPU supply, order conversion, and execution of large enterprise projects. For now, Dell appears better placed to capture immediate AI hardware momentum, while HPE’s model could yield more resilient earnings once the AI build-out matures.