Dell at $329.00 after 43.1% slide; earnings to test AI trade

The selloff in Dell and HPE began before the midterm elections, when Dell led a slide in data center equipment stocks on worries about the timing of enterprise AI spending. Fears of data center regulation after the midterms then hit a stock that was already falling, and HPE fell in the same wave even though its own risks differ.

Dell's problem is that record revenue is not turning into cash. In fiscal Q2 2027, free cash flow came in at $986 million, down 47% year over year, even as revenue reached a record $46.97 billion — a weak spot the macro concern exposed. Management's guidance for fiscal Q3 2027, including revenue of $49.0 billion and AI server revenue of $19 billion, gives a clear target, and the company ended fiscal Q2 with a record $95 billion AI backlog. HPE instead depends on turning Juniper Networks into a growth engine; reported networking revenue rose 74.9% to $2.89 billion, but on the normalized basis management used, networking grew 10% and data center networking revenue declined 6%. HPE's fiscal Q3 free cash flow came in at $958 million, up 21% year over year.

HPE goes into earnings with the stronger setup — a confirmed November 23 date, growing free cash flow and a fiscal 2027 framework — while Dell has the larger growth engine and backlog but a recovery that depends on cash flow. A second straight quarter of lower free cash flow on record revenue would likely keep Dell under pressure regardless of how many AI orders it books.