Insider Monkey favors HPE over Dell for risk-adjusted AI exposure: HPE trades at about 14 times forward earnings versus Dell near 20, while Dell’s $95 billion AI-server backlog must convert into cash amid working-capital and margin risks.
Dell reported fiscal second-quarter revenue of $47.0 billion, up 58%, including $16.4 billion in AI-server revenue; it raised its full-year AI-server forecast to $74 billion from $60 billion. Operating cash flow was $2.2 billion as inventories grew. HPE’s fiscal third-quarter revenue rose 34% to $12.2 billion, including $9.0 billion in Cloud & AI revenue.
HPE’s Cloud & AI operating margin improved to 17% from 7% a year earlier. Its roughly 40% gross margin compared with Dell’s roughly 21% reflects, in part, different business mixes. Juniper gives HPE more networking exposure around AI clusters, but HPE has a smaller AI-server footprint and a more complex integration. The article says Dell could outperform if it converts its backlog into cash quickly.
