Q1 Earnings Review: Dell, HPE, and HP in the Hardware & Infrastructure Sector - Strong Results Amidst Challenges

As the earnings season for the hardware and infrastructure sector winds down, it's worth taking a look back at some of the most notable results from Q1. The sector has been buoyed by demand related to AI adoption, cloud computing expansion, and the need for more efficient data storage and processing solutions. Companies that provide tech offerings such as servers, switches, and storage solutions are well-positioned in our new hybrid working and IT world. However, headwinds include ongoing supply chain disruptions, rising component costs, and intensifying competition from cloud-native and hyperscale providers reducing reliance on traditional hardware. Additionally, regulatory scrutiny over data sovereignty, cybersecurity standards, and environmental sustainability in hardware manufacturing could increase compliance costs.

The 9 hardware and infrastructure stocks we track reported a slower Q1. As a group, revenues were in line with analysts' consensus estimates while next quarter's revenue guidance was 0.7% above. Fortunately, hardware and infrastructure stocks have performed well with share prices up 10.7% on average since the latest earnings results.

Dell Technologies (NYSE:DELL) - A Strong Quarter with Missed Operating Income Estimates

Founded by Michael Dell in his University of Texas dorm room in 1984 with just $1,000, Dell Technologies provides hardware, software, and services that help organizations build their IT infrastructure, manage cloud environments, and enable digital transformation. Dell reported revenues of $23.38 billion, up 5.1% year on year. This print exceeded analysts' expectations by 1.1%. Despite the top-line beat, it was still a softer quarter for the company with a significant miss of analysts' operating income estimates. Interestingly, the stock is up 1.6% since reporting and currently trades at $115.43.

Best Q1: Hewlett Packard Enterprise (NYSE:HPE)

Born from the 2015 split of the iconic Silicon Valley pioneer Hewlett-Packard, Hewlett Packard Enterprise provides edge-to-cloud technology solutions that help businesses capture, analyze, and act upon their data across hybrid IT environments. Hewlett Packard Enterprise reported revenues of $7.63 billion, up 5.9% year on year, outperforming analysts' expectations by 2.3%. The business had a strong quarter with a solid beat of analysts' ARR and EPS estimates. Hewlett Packard Enterprise delivered the biggest analyst estimates beat among its peers. The market seems content with the results as the stock is up 1.5% since reporting. It currently trades at $17.94.

Weakest Q1: HP (NYSE:HPQ)

Born from the legendary Silicon Valley garage startup founded by Bill Hewlett and Dave Packard in 1939, HP designs and sells personal computers, printers, and related technology products and services to consumers, businesses, and enterprises worldwide. HP reported revenues of $13.22 billion, up 3.3% year on year, exceeding analysts' expectations by 0.9%. Still, it was a disappointing quarter as it posted a significant miss of analysts' EPS estimates. As expected, the stock is down 10.7% since the results and currently trades at $24.37.

Pure Storage (NYSE:PSTG) - Strong Quarter with Beat of Analysts' EPS Estimates

Founded in 2009 as a pioneer in enterprise all-flash storage technology, Pure Storage provides all-flash data storage hardware and software that helps organizations manage their data more efficiently across on-premises and cloud environments