The Tables Have Turned: A Year Ago Hewlett Packard Was The Cheaper Bet, Not Dell and Super Micro

The market now charges more for Hewlett Packard Enterprise than its faster-growing rival, forcing investors to decide if a record backlog is worth the higher price.

For investors in the enterprise hardware space, Hewlett Packard Enterprise (HPE) and Dell Technologies (DELL) represent two direct paths to the same theme. Yet the market is pricing these rivals very differently. An investor today pays 35.5 times operating profit for HPE, while Dell, which grew revenue faster over the last year, costs only 29.6 times. The real question is what has changed to justify a premium that HPE did not command a year ago, when its multiple was actually lower than Dell's. The positions have flipped, putting HPE's new valuation on trial.

HPE's premium rests on a record backlog and accelerated profit targets.

The case for paying more for HPE is a bet on execution and visibility. Management recently signaled extreme confidence, stating it now expects to hit its long-term earnings and cash flow targets two years ahead of schedule. The company is guiding for at least $3.5 billion in free cash flow in fiscal 2026. This forward-looking optimism is backed by a tangible order book. In its latest quarter, HPE's orders "more than doubled significantly outpacing revenue, resulting in a record company backlog."

This demand is fueled by AI, where the company booked $1.8 billion in new AI systems orders, bringing its cumulative total to $16.4 billion. The integration of Juniper Networks, a key strategic move, is reportedly running "ahead of schedule." For investors, this combination of a large, locked-in backlog and accelerated financial goals suggests future growth is less speculative and more a matter of fulfillment, a quality that often warrants a higher multiple.

The key numbers side by side, today:

OpInc = Operating Income, P/OpInc = Price To Operating Income Ratio

And the same comparison exactly a year ago, so you can see which way the mismatch has been moving:

OpInc = Operating Income

Paying more for HPE means forgoing a cheaper peer with faster growth.

The premium on HPE is not paid in a vacuum. By choosing it, an investor is actively passing on Dell, a company that is not only cheaper but has a stronger recent growth record. Dell's revenue grew 38.6% over the last twelve months, outpacing HPE's 22.6% clip. Dell also carries a higher operating margin of 8.1% versus HPE's 5.8%. This is not a static picture; Dell also raised its forward guidance in its latest report, signaling its own management sees continued momentum.

Dell is also securing significant AI business, such as a recent deal to build a secure AI platform for the Texas A&M Engineering Experiment Station. While HPE builds its backlog, its ability to convert those orders into revenue is capped by a key constraint. Management has been clear that the primary gating factor to growth is the "availability of supply," a situation it does not expect to change much in the near term. Paying a premium for backlogged growth that may be slow to realize is a significant trade-off.

The premium's survival depends on converting that backlog into revenue.

The decision between these two hardware giants turns on execution versus momentum. HPE's stock price reflects a belief that its record-setting backlog will translate directly into the accelerated profits management has promised. Dell offers faster demonstrated growth at a lower price today. The core tradeoff is whether to pay for HPE's future potential, which is gated by supply chain realities, or to buy into Dell's current, faster-moving trajectory.

The clearest test of HPE's premium will be its ability to deliver on its own aggressive forecast. Management has guided for full-year consolidated revenue growth for 2026 to land between 29% and 33%. Hitting or exceeding that range would validate the market's confidence; falling short would call the entire premium into question.

Want To Stack Them Up Side By Side Yourself?

You can line Hewlett Packard and Dell and Super Micro up directly on the Hewlett Packard peer comparison, weigh them on valuation, growth, margins, and returns, and swap in any other Technology Hardware, Storage & Peripherals names you hold. Or, if you would rather own the whole group than choose between them, our ETF Scorecard shows how the technology funds stack up.

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