Dell vs HP: 2 Legacy Tech Giants, 2 Very Different AI Bets

Core Insights - Dell Technologies is significantly outperforming HP in the AI sector, with nearly $10 billion in AI server revenue for FY2025 and a forecast of at least $15 billion for FY2026, while HP's printing segment is declining [1][2][4] - Dell's total revenue for FY2025 reached $95.6 billion, marking an 8% increase, and its earnings grew by 45.4% year over year, contrasting with HP's operating income decline of 16.87% [1][6][7] Growth Trajectory - Dell's AI server business is experiencing robust growth, with a backlog of approximately $9 billion as of February [2][6] - HP's Personal Systems revenue grew by 11% year over year in Q1 FY2026, driven by AI PC sales, but its printing segment has seen a consistent decline [7] Valuation - HP has a trailing P/E of 7x and a forward P/E of 7x, while Dell's trailing P/E is 17x and forward P/E is 12x, indicating a higher valuation for Dell due to its growth prospects [8][9] - HP's price-to-sales ratio is 0.31x compared to Dell's 0.90x, reflecting the structural risks associated with HP's business model [8][9] Yield and Income - HP offers a higher dividend yield of 6.2% with a quarterly dividend of $0.30 per share, while Dell's yield is 1.4% with an annual dividend of $2.52 per share, which was raised by 20% [11] - Despite HP's higher yield, it is accompanied by declining profitability and rising cost pressures [11][12] Long-Term Track Record - Over the past year, Dell shares have appreciated by 63.62% and by 246.71% over five years, while HP shares have decreased by 34.25% in the past year and by 38.61% over five years [13] - This divergence highlights the fundamentally different strategic positions of the two companies in the current market environment [13][14]