Dell Technologies (DELL) and Hewlett Packard Enterprise (HPE) found themselves at the top of the S&P 500 on the back of Oracle’s (ORCL) forceful reminder of how much money is still flowing into AI infrastructure.
Dell’s stock soared 12% on Sept. 11, while HPE was another of the index’s best performers. Investors quickly saw the connection: Oracle needs plenty of servers, networking gear, and other data center hardware to keep up with surging AI demand.
Oracle’s fiscal first-quarter results supported this trend. Total revenue rose 30% to $19.3 billion, while cloud infrastructure revenue surged 121% to $7.4 billion. Even more impressive, remaining performance obligations rose $209 billion to $664 billion.
That backlog presents a potential strong read-through for Dell and HPE.
But there is another side to this tale. The businesses fueling the AI boom are more and more fixated on the costs of borrowing and the next actions by the Federal Reserve as they pour unusual amounts of resources into building enough data centers to translate Oracle’s contracts into income.
Oracle’s AI demand gives Dell a powerful tailwind
Oracle said it provided an additional 850 megawatts of data center capacity in the quarter and more than 300,000 GPUs to AI cloud clients since the end of its previous quarter. It also won more than $30 billion in new contracts for AI-related cloud services.
Those metrics are important to Dell since its AI infrastructure business is already growing at an amazing pace.
Dell reported record fiscal second-quarter revenue of $47 billion, up 58% year-over-year. The company booked a record $60.9 billion of AI server orders, generated $16.4 billion of AI server revenue, and exited the quarter with a $95 billion AI server backlog. Dell consequently lifted its fiscal 2027 revenue forecast by $25 billion to $192 billion.
The acceleration is especially notable given the previous quarter, in which Dell posted $24.4 billion in AI orders and $16.1 billion in AI server revenue.
Dell isn’t just sitting around waiting for demand to emerge. The business now has more than 5,000 clients using its AI Factory platform and is continuing to expand the portfolio with Nvidia-powered hardware, networking, storage, and agentic AI infrastructure.
HPE is seeing the same AI infrastructure surge
It’s not only Dell that’s benefiting, as HPE’s recent numbers show.
It reported record fiscal third-quarter revenue of $12.2 billion, up 34% from a year earlier, and orders and backlog. HPE’s Cloud & AI segment earned $9.04 billion, up 25%, and server revenue rose 35% to $6.77 billion.
Profitability was also up. Cloud & AI operating margin expanded to 17% from 7% a year ago, and HPE generated $958 million of quarterly free cash flow. Management lifted its guidance for fiscal 2026 and fiscal 2027 following the results.
This comes after a solid second quarter in which Cloud & AI sales were $7.7 billion and server revenue was up 33%.
Antonio Neri, CEO of HPE, told investors that AI is a “multiyear growth driver” as customer orders grow faster than revenue and supply constraints slow demand fulfillment.
HPE is also strengthening its Nvidia partnership. The AI Factory portfolio includes Nvidia-powered accelerated computing, networking, and private-cloud systems, including the upcoming Vera Rubin infrastructure.
Oracle’s spending boom comes with a financing warning
Oracle’s numbers confirm demand, but they also show how capital-intensive the AI buildout has become.
The company posted a record first-quarter operating cash flow of $23 billion, but free cash flow was negative $5 billion as it continued to build out cloud infrastructure. Also in the quarter, Oracle sold $20 billion in stock.
Oracle raised $43 billion in debt and $5 billion in equity in fiscal 2026 but had a $23.7 billion negative free cash flow. The company predicted raising $40 billion in debt and equity in fiscal 2027.
Dell and HPE care about rates even as the underlying demand for AI is booming, and the need for financing is part of the reason why. Higher borrowing costs can make marginal data center projects less attractive, especially for smaller cloud providers and AI companies that don’t have hyperscaler-sized balance sheets.
The Federal Reserve left its benchmark rate unchanged at 3.5% to 3.75% at its July meeting, citing persistent inflation.
Its next policy meeting is scheduled for Sept. 15-16.
So, Oracle’s quarter sent two signals at once for Dell and HPE investors. AI infrastructure demand is still quite robust, and both server manufacturers have the order books to show it.
But keeping that cycle of spending going will require a lot of cash.
The $664 billion backlog at Oracle demonstrates how big the potential has become. What could eventually slow it down are its financing needs.
