By Peter Cohan
Publication Date: 2026-06-02 14:11:00
Hewlett Packard founders William Hewlett (left) and David Packard (right), w. Transistorized electronic counters in the factory. (Photo by Jon Brenneis/Getty Images)
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Dell and HPE just posted their strongest AI server quarters yet, sending both stocks soaring, but rising demand is colliding with rising component costs and tight server margins. For investors, the key question now is whether AI-driven revenue growth can overcome growing pressure on profitability. That tension helps explain why the market reacted so sharply: Dell Technologies jumped 32% on May 29, its best trading day ever, after reporting fiscal first-quarter 2027 results, while Hewlett Packard Enterprise increased about 30% after hours on June 2 after its biggest earnings beat since 2018.
In the case of two companies that I long dismissed as exporters of low-growth boxes, I was surprised by the magnitude of the upward movement.
This raises many questions, the most important of which for investors is: Is the quality of…
