The GenAI waves are trying to lift all boats, and Hewlett Packard Enterprise is finally showing some profits as AI directly and indirectly boosts sales of AI systems based on Nvidia GPUs as well as traditional servers based on Intel and AMD servers. The company danced around its numbers, but as far as we can tell, sales of traditional servers far exceeded sales of GPU-accelerated machines in HPE’s most recent quarter.

Which is another way of saying: HPE is not Dell, which really is getting a huge boost from the GenAI wave and also has a booming traditional server business. The difference between the two companies is noteworthy. In its most recent quarter, Dell’s traditional server business was up 89.3 percent to $8.54 billion while AI system sales exploded by a factor of 8.8X to $16.13 billion. By contrast, in my model, HPE sold $3.91 billion in traditional servers in its Q2 of fiscal 2026, a quarter that ended in April, up 25 percent, while its sales of AI system sales rose by 66 percent year on year to $1.54 billion.

We remember when HPE bought Compaq, which had bought DEC and Tandem, and became the largest server maker in the world, and Dell was a lot smaller and the ODMs were coming on strong but still smaller. HPE, while still an important OEM for enterprises and sovereigns, is clearly in Dell’s rear view mirror, and is also dwarfed by Supermicro and Lenovo.

That said, HPE turned in one of the best quarters we have seen in a long time, and is optimistic about the future of its systems business, including servers, storage, and networking and is in good shape to capitalize on the immense capital budgets that IT organizations around the world, including pure-play AI neoclouds and sovereigns, are going to spend this year and next.

We are glad, for the sake of HPE and its employees, who do good work making systems and supercomputers (thanks to acquisitions of Convex, SGI, and Cray), that the company’s stock popped this week after the numbers came out. But there is a little bit of irrational exuberance going on here as everyone is drinking the green margaritas with reckless abandon.

HPE is going to have an AI systems business that is maybe one-tenth the size of that of Dell this year, and Dell and HPE will be just a small piece of the $500 billion in system components that Nvidia sells this year, which may turn into something like $600 billion in AI system sales at the end user level. Dell is 10 percent of that if it makes its $60 billion goal, and HPE might be 1 percent of that Nvidia AI systems pie. AMD AI systems are noise in this data, but won’t be. And if HPE had real ambition, it would partner hard with AMD and its rebel alliance for networking and storage and drive the price/performance curve down and possibly its operating profits on AI systems up.

In the quarter, HPE posted $10.68 billion in sales, up a very solid 40 percent thanks to the addition of Juniper Networks to its books, the fourth and final quarter where this will be an easy compare, as well as to the pickup in traditional server sales as well as AI server sales. Operating income was $747 million compared to an operating loss of $1.11 billion in the year ago period. So that is good. Net income was $595 million, which is a heck of a lot better than the $1.08 billion loss this time last year.

The HPE cash and equivalents hoard grew sequentially by 9.3 percent to $5.29 billion. This is a nice cushion, but not one that let’s HPE make a big acquisition (which it has no appetite for anyway after just eating Juniper) even if it does give it the working capital to fulfill its AI system orders as it converts its backlog into sales as GPU allocations come in.

Here is the detailed table for the quarters where HPE has detailed its relatively new financial presentation:

The Cloud & AI group had $7.71 billion in sales, which combines servers, storage, and financial services and which grew by 22.9 percent. Operating income was up by 2.3X to $954 million.

Within this, server revenues were up 32.7 percent to $5.45 billion, in the split I talked about at the top of this story. Storage did its thing, growing a mere 2.4 percent to $1.18 billion. As has been the case for HPE as long as we can remember, newer storage is growing and older storage is not. This is ever the way.

The Networking group, which includes HPE’s miniscule datacenter networking business, the Aruba business, and the Juniper business all put together, had sales of $2.69 billion, up by a factor of 2.5X year on year. But, once again, the easy compares have run out from this point forward. This business has averaged around $2.7 billion for three quarters in a row. In Q2 F2026, operating income was $581 million, more than double but against an easy compare when HPE didn’t have Juniper in the numbers. Datacenter networking accounted for $320 million, up 3.3X.

Since the advent of The Next Platform more than a decade ago, I have been extracting the core datacenter business out of Hewlett Packard and then HPE, eliminating the higher level software and services that the company offers and taking out any branch and campus stuff.

As best I can figure, this core HPE systems business had $9.08 billion in sales, up 16.2 percent, with operating income of $1.25 billion, up 63.4 percent. Juniper is the big add to the operating profits here. The core datacenter business represented around 82 percent of all of the operating income for the company. (This is before corporate offsets.)

Looking ahead, HPE expected for Q3 F2026 revenues to be between $11.5 billion and $12.1 billion. For the full year, HPE now says it will grow sales by between 29 percent and 33 percent, which puts it at between $44.24 billion and $45.61 billion. This is the best growth that HPE has seen in a long, long time. The Cloud & AI group was expected to grow in the mid to high single digits in fiscal 2026, and now the forecast is for growth in the low 20 percents, driven by higher average selling prices and AI system sales expansion. Call it 23 percent growth, which outs it at $32.8 billion. The Networking group will grow between 72 percent and 75 percent in fiscal 2026, call it 73.5 percent at the midpoint, which is $11.3 billion.

When all is said and done, HPE might be a better indicator of how the GenAI boom is doing at enterprises, sovereigns, and neoclouds than is archrival Dell.