Dell and HPE Were AI Winners Until the Selloff. Can Earnings Put Them Back on Track?
Dell and HPE both erased roughly 40% of their AI-fueled gains in a month, and two earnings reports land within days of each other. One company's cash flow and the other's networking bet will decide which rebound is real.
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The biggest hardware winners of the AI expansion have handed back a large share of their gains in a few weeks. Dell Technologies (NYSE:DELL | DELL Price Prediction) was quoted at $329.00 in premarket trading on November 9, 2026. That is 43.1% below its $578.17 close on October 7, and the stock has fallen 22.5% since October 30. Hewlett Packard Enterprise (NYSE:HPE) lost 37.7% over the same one-month stretch, falling from $72.09 to $44.90, with an 18.5% drop since October 30. The steepest selling began after the midterm elections, when investors grew concerned that a Democratic Congress and states across the country would crack down on artificial intelligence and data centers. Both stocks are still well ahead for the year, with Dell up 164.2% and HPE up 89.0%. Each one reports earnings soon, and those reports will show whether either deserves to recover.
Dell Technologies: A $95 Billion Backlog Has to Turn Into Cash
What Went Wrong
Dell’s slide began before the election. In mid-October, Dell led a selloff in data center equipment stocks as investors worried about the timing of enterprise AI spending. Then fears about data center regulation after the midterms hit a stock that was already falling. The macro concern also exposed a weak spot in Dell’s own numbers. In fiscal Q2 2027, free cash flow came in at $986 million, down 47% year over year, even as revenue reached a record $46.97 billion. Lower cash generation alongside record sales is a problem for investors who are already wondering how long the AI expansion will last.
Margins are the second concern. The non-GAAP operating margin expanded to 12.6% from 7.7%, and the Infrastructure Solutions Group’s (ISG’s) operating margin rose to 15.0% from 8.8%. Dell CFO David Kennedy cautioned during the call: “While we would not expect every benefit to continue at this level, the quarter also reflects meaningful structural improvements in the business.” Supply is also tight. COO Jeff Clarke said, “The constraints remain the same. DRAM, DRAM, DRAM, followed by NAND, NAND, NAND.”
Catalyst: Fiscal Q3 2027 Earnings
Dell is expected to report fiscal Q3 2027 on November 24. Management’s guidance gives a clear target to measure against: revenue of $49.0 billion (up 81% year over year), non-GAAP EPS of $6.50, and AI server revenue of $19 billion. Dell also guided for an ISG operating income rate that is up just over a point year over year. For the full year, guidance stands at $192 billion in revenue, $74 billion in AI-optimized server revenue and $25.50 in non-GAAP EPS.
Demand gives Dell a strong starting point. The company booked $60.9 billion in AI server orders in fiscal Q2 and ended the quarter with a record $95 billion AI backlog. It has beaten EPS estimates five consecutive times, including a 43.69% surprise in fiscal Q2. Clarke described the constraint as supply: “Demand was even greater than the results that we published there. We are supply constrained.”
What Has to Go Right
- Revenue meets or beats the $49.0 billion guide, and the $192 billion full-year target holds or rises.
- The AI backlog grows beyond $95 billion, which would show that orders are still running ahead of shipments.
- Free cash flow stops falling, so record revenue starts turning into cash.
- The non-GAAP operating margin remains above 12% as lower-margin AI servers make up a larger share of sales.
What Would Falsify the Case
Dell’s recovery thesis falls apart if any of these happen:
- Free cash flow keeps falling while revenue grows
- The backlog stalls or contracts from $95 billion
- AI server margins drop faster than scale can offset, or Dell cuts its $25.50 EPS or $192 billion revenue guidance.
A shrinking backlog would support the October concern about enterprise AI timing more than any political headline.
Hewlett Packard Enterprise: Juniper Has to Deliver the Networking Ramp
What Went Wrong
HPE fell in the same post-midterm selloff, but its own risks are different from Dell’s and its thesis depends on turning Juniper Networks into a growth engine. CEO Antonio Neri described the strategy on the September 2 call: “We are leading with networking. We are at the core becoming a networking company.” Investors who fear a slowdown in data center construction are reconsidering that shift. AI systems make up more of revenue. Management has also said gross margin should moderate toward more historical levels as that happens, and it expects the Cloud & AI operating margin to ease to approximately 13% in fiscal 2027.
Behind the headline growth, HPE’s results were mixed. Reported networking revenue rose 74.9% year over year to $2.89 billion, helped by the Juniper deal. On the normalized basis management used on the call, networking grew 10%, and data center networking revenue declined 6%, which management attributed to shipment timing and supply constraints.
Catalyst: Fiscal Q4 2026 Earnings on November 23
HPE has confirmed it will hold its fiscal fourth-quarter earnings call on Monday, November 23, at 5:00 p.m. ET, covering the quarter that ended October 31, according to its November 2 press release. Guidance calls for fiscal Q4 revenue of $13.9 billion to $14.8 billion and non-GAAP EPS of $1.20 to $1.30. HPE will also be judged on whether it maintains its fiscal 2027 framework: revenue growth of 13% to 17%, EPS of $4.40 to $4.60 and free cash flow of at least $5.0 billion.
Cash flow supports the case. Fiscal Q3 free cash flow came in at $958 million (+21% year over year), and the non-GAAP operating margin expanded to 16.2% from 8.5%. HPE has beaten EPS estimates for at least six quarters. Networking orders rose 36%, and HPE announced an expanded collaboration with Oracle (NYSE:ORCL) under which Oracle will deploy HPE Juniper routers and switches across a large AI cloud expansion. Neri called it “a multi-gigawatt, multiyear opportunity.” HPE also said that after the quarter closed, it won a multibillion-dollar server deal with a hyperscaler customer for inferencing. Buyers returned briefly on November 6, when the stock outperformed competitors on a strong trading day.
What Has to Go Right
- Fiscal Q4 revenue lands at or above the midpoint of the $13.9 billion to $14.8 billion range as more backlog converts to sales.
- Reported networking growth for fiscal 2026 lands within the raised 73% to 74% guide.
- Fiscal 2026 free cash flow of at least $3.75 billion is confirmed.
- Juniper synergies remain on pace or ahead of schedule to reach the $600 million annual run-rate savings target by the end of fiscal 2028.
What Would Falsify the Case
HPE’s recovery thesis falls apart if it cuts its fiscal 2026 non-GAAP EPS guide of $3.75 to $3.85, trims the fiscal 2027 framework, reports networking growth below guidance, or books new impairments tied to integration. A stall in server growth after the 35.3% gain in fiscal Q3 would also suggest that the post-midterm concerns about data center spending have reached HPE’s customers.
Which Comeback Case Holds Up Better
HPE goes into earnings with the stronger setup: a confirmed November 23 date, free cash flow that is growing, and a fiscal 2027 framework that sets a clear standard for the report. Dell has the larger growth engine and the more impressive backlog, but its recovery depends on cash flow, and a second straight quarter of lower free cash flow on record revenue would keep the stock under pressure regardless of how many AI orders it books.
Both names also sit downstream of the same data-center expansion we mapped in a free report on seven AI infrastructure suppliers that aren’t chipmakers.
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Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.
Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community.
Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.
Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, moderating workshop sessions at regional conventions.
