Oracle's AI Spending Spree Drives HPE and Dell Stock Rally

Key Takeaways

Table of Contents

Shares of HP Enterprise climbed over 16% while Dell Technologies gained 10.6% following Oracle’s fiscal 2027 capex confirmation
Oracle’s CFO specifically identified HPE and Dell as primary recipients of AI infrastructure spending for racks, cooling systems, and networking equipment
HP Enterprise delivered record third-quarter fiscal 2026 revenue totaling $12.2 billion, representing 34% growth from the previous year
RBC Capital Markets assigned Dell an Outperform rating with $640 price target, highlighting a massive $95 billion AI server backlog
HP received RBC coverage initiation with Sector Perform rating and $33 price target

Shares of HP Enterprise and Dell Technologies experienced significant gains Friday following Oracle’s reaffirmation of its fiscal 2027 capital spending outlook. During the announcement, Oracle’s Chief Financial Officer Hilary Maxson explicitly stated that capital allocation would target vendors providing AI racks, cooling infrastructure, and networking solutions, specifically highlighting HP Enterprise and Dell as key partners.

HP Enterprise stock surged more than 16% during trading, while Dell Technologies advanced approximately 10.6%. HP Inc. also posted gains exceeding 8% for the session.

Dell Technologies Inc., DELL

HP Enterprise Delivers Milestone Quarter

HP Enterprise had already delivered impressive financial results prior to Friday’s stock surge. The technology giant reported third-quarter fiscal 2026 revenue reaching $12.2 billion, marking a 34% increase compared to the same period last year. Adjusted earnings per share reached $1.11, representing the first time the company has exceeded the $1.00 threshold.

The company generated approximately $1 billion in free cash flow during the quarter. Executives increased the full-year free cash flow projection to a minimum of $3.75 billion and established a fiscal 2027 objective exceeding $5 billion.

Purchase commitments experienced dramatic expansion, climbing to $30 billion from $6 billion the previous quarter. Networking-related commitments specifically doubled on a sequential basis.

Earlier in the month, HP Enterprise and Oracle unveiled a strategic collaboration. Oracle intends to implement HPE’s routing and switching technology throughout its entire data center portfolio as part of its global AI infrastructure expansion.

Oracle’s remaining performance obligations increased by $209 billion during the first quarter to reach $664 billion, incorporating over $30 billion in fresh AI cloud agreements. This expansion underscores sustained demand for the hardware solutions HP Enterprise provides.

Wall Street Analysts Upgrade Dell and HP

RBC Capital Markets launched coverage of Dell with an Outperform designation and established a $640 price objective. Analyst David Paige indicated that Dell concluded the second quarter of fiscal 2027 holding $95 billion in AI server backlog, with the pipeline showing continued expansion.

Paige emphasized that current market conditions reflect supply constraints rather than demand weakness, predominantly driven by memory component availability. He anticipates the backlog will remain elevated throughout fiscal 2027, providing revenue visibility extending into fiscal 2028.

RBC also highlighted agentic AI as a catalyst for incremental CPU and conventional server demand. Enterprise server modernization cycles, PC replacement demand, and AI inference workload migration were identified as supplementary growth catalysts.

Major enterprise customers are executing multi-year agreements spanning three to five years to guarantee supply chain access, according to RBC’s research.

Regarding HP Inc., RBC established a Sector Perform rating accompanied by a $33 price target. The investment bank noted HP’s favorable positioning to capitalize on AI-enabled PC adoption and edge computing expansion. HP is projecting AI PC shipments will represent 60 to 70% of total volume by fiscal 2027, increasing from approximately 45% during the third quarter of fiscal 2026.

Multiple Wall Street analysts revised their price targets upward for HP Enterprise following the earnings release. Bank of America elevated its target to $88, Truist increased its objective to $70, and Evercore ISI reaffirmed an Outperform rating.

HP Enterprise also revealed plans for a Networking Investor Day scheduled for September 30, 2026 at its Sunnyvale, California location. Market participants are monitoring the event as a potential stock catalyst.

HP Enterprise shares closed Friday at $61.43, nearing but remaining below the 52-week high of $64.25.

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