Jim Cramer revisited Hewlett Packard Enterprise Company (NYSE:HPE) on Mad Money, explaining why its improving profitability and networking business had renewed his interest. Although Dell Technologies Inc. (NYSE:DELL) remains his preferred company, he said, “Look, I still prefer Dell, but HPE has finally broken out of its funk and then some.” Cramer had already begun reconsidering HPE in September. His earlier comparison with Dell revealed which doubts he had dropped and why his preference remained unchanged.
Dell made it to our list of 10 Best AI Stocks to Buy Before They Explode. See where it ranked and whether HPE also made the list.
HPE Is Turning AI Demand Into Higher Profits
Cramer’s renewed enthusiasm is about HPE’s ability to translate rising demand into better margins, as he said:
Now, when the company was struggling in 2024 and 2025, they kept having trouble with their margins. While HPE was seeing improved growth from AI, it was also spending heavily, which meant the new AI business was less profitable than it could have been. But over the past few quarters, that’s really improved.
Hewlett Packard Enterprise Company reported fiscal third-quarter revenue of approximately $12.2 billion, up 34% year over year. Its adjusted operating margin reached 16.2%, compared with 8.5% a year earlier, while its GAAP operating margin rose to 11.4%. Management raised fiscal 2026 adjusted earnings guidance to $3.75 – $3.85 per share. The distinction matters because the margin progression Cramer discussed refers to adjusted results.
Networking provides another reason for his interest. At its September 30 investor event, HPE projected high-teens annualized networking revenue growth through fiscal 2029 and operating margins in the mid-to-high 20% range from fiscal 2027 through fiscal 2029. It also announced a $1.2 billion order from Vultr for AMD Helios systems incorporating HPE networking technology. Networking also changes how HPE compares with more server-focused rivals. An earlier assessment of HPE against Super Micro examined why the lower-priced stock might not offer the better bargain.
Dell Has the Larger AI Server Business
Dell Technologies Inc. reported approximately $47 billion in fiscal second-quarter revenue, up 58% year over year. AI-optimized server revenue doubled to approximately $16.4 billion, while the company booked $60.9 billion in AI orders and finished the quarter with a $95 billion AI backlog. Its Infrastructure Solutions Group operating margin increased to 15% from 8.8%. Scale is not the only factor behind Cramer’s preference for Dell. His earlier assessment alongside Super Micro focused on a concern that strong AI demand alone could not resolve. The results give context to Cramer’s continued preference for Dell, even as he sees an opportunity in Hewlett Packard Enterprise Company, as he said:
I am not ready to say that I like HPE more than Dell because Dell’s best of breed, but Dell trades at 18 times next year’s adjusted earnings. HPE only trades at less than 15 times next year’s numbers, which is much lower than it should be versus its growth rate.
For an updated comparison, HPE trades at approximately 15.2x forward earnings and Dell at 20.6x. These provider estimates differ from Cramer’s quoted multiples, but HPE still carries the lower forward earnings valuation. Cramer’s enthusiasm for Dell also produced an unexpected comparison with Cowboys receiver CeeDee Lamb, built around how he believed investors had underestimated the company entering 2026.
Supply Costs and Integration Remain Important
Hewlett Packard Enterprise Company’s networking targets depend partly on integrating Juniper and delivering anticipated savings. The company increased its annual cost-savings target to $800 million by the end of fiscal 2028, but those savings remain a target. It also doubled networking supply purchase commitments sequentially in its fiscal third quarter to address demand and supply constraints.
Dell Technologies Inc. faces its own pressures. Its latest quarterly filing reported rising component costs and constrained memory supplies, with cost inflation expected to persist through the remainder of fiscal 2027. The company also mentioned that customer readiness and component transitions can make AI server shipments uneven. A growing backlog does not guarantee a smooth quarterly revenue progression.
Hedge Funds Broadened Their Exposure to Both
According to Insider Monkey’s database, Hewlett Packard Enterprise Company’s hedge fund holders increased to 85 in Q2 from 58 in Q1, while Dell Technologies Inc. rose to 77 from 72. HPE attracted the larger increase in holders, although fund counts alone do not show how much capital was invested. Short interest stood at 4.80% of HPE’s float and 4.68% of Dell’s, showing little difference between the two measures.
Cramer still favors Dell’s execution, but HPE’s stronger margins and lower earnings multiple have brought it back into consideration. His closing comment was direct, as he said, “Given the lower valuation, I think HPE’s got more upside here.” The next test is whether HPE can keep delivering the improvements that changed his view while Dell works through its much larger AI order book.
While we acknowledge the risk and potential of DELL and HPE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DELL and HPE that has 10,000% upside potential, check out our report about this cheapest AI stock.
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