Sometimes the market misses the forest for the trees. Hewlett Packard Enterprise grabbed headlines on Friday after Bloomberg reported it had inked a $1 billion AI server deal with Elon Musk’s X, but the stock barely flinched—closing up less than 1% after an initial spike. Basically, call it a tepid reaction to what could be a game-changing moment for HPE in the AI server wars.

(Source: Giphy) 

In short, HPE, despite its legacy in enterprise hardware, has been playing catch-up in the AI server race. Competitors like Dell Technologies and Super Micro Computer have often been seens as the go-to players for high performance, AI-optimized systems (Well… until, Super Micro got bodybagged by Hindenburg that is). 

However Musk, who’s building out AI workloads across ventures like X, Tesla, and xAI, just handed HPE a massive credibility boost. It’s not just about the money—it’s about the message this sends in a market that’s increasingly driven by AI infrastructure demand. See, the real move here isn’t just that HPE landed a seismic $1 billion deal—it’s that Musk actually picked HPE over Dell and Super Micro LOL. Which is a headline that has heads rolling far beyond this contract. 

(Source: Investing.com) 

Now, sure HPE has been touting its AI capabilities, but the perception has always been that Dell and Super Micro were a step ahead, particularly when it came to cutting-edge server tech. Musk’s decision flips that script. It’s a Cinderella story in the making and a God given play that officially labels HPE a serious contender in the AI infrastructure boom. Simply put, Elon Musk’s ventures don’t just buy hardware—they set trends. When Musk builds out a supercomputer for xAI or outfits Tesla’s AI labs, it’s not just a procurement exercise. It’s a signal to the broader market about where the cutting-edge players are placing their bets.

For instance, xAI is already leveraging hardware from Dell and Super Micro for its Memphis-based supercomputer. Musk could’ve doubled down on those relationships. Instead, he turned to HPE, and that choice speaks volumes. Whether it’s because of HPE’s liquid-cooling technology (a likely factor, according to Bloomberg analysts) or just pricing leverage, the deal shows HPE has something that caught Musk’s eye—and that could open more doors in the AI server space.

(Source: Giphy)

Of course, Super Micro stuck to their new PR playbook of downplaying the news, issuing a statement about it’s “strong partnerships” with Musk’s companies and the broader demand for its own liquid-cooling tech. But let’s be real: losing a $1 billion contract to a competitor stings, especially when you’re in a market where perception drives deal flow.

Dell, meanwhile, took it on the chin, with its stock down 3.8% in Friday trading. Meaning for a company that’s been trying to solidify its dominance in the AI server space, this loss is a reminder that says: ain’t no one safe—not even the perceived frontrunners. 

(Source: Tom's Hardware) 

Looking ahead, the Musk deal is definitely a turning point for HPE, but it’s not a guaranteed golden ticket. Large contracts like this can be great for revenue but tough on margins, and  the broader market remains hyper-competitive, with Dell and Super Micro unlikely to sit quietly on the sidelines. Still though, this deal gives HPE something it’s lacking in the raging AI race: momentum.  If the company can capitalize on this win and build out its reputation as a top-tier AI server provider, the long-term upside could dwarf the immediate $1 billion payday.

For now, HPE has the spotlight—and a chance to leverage it into a bigger seat at the AI table. Whether it can sustain that momentum is the real question. In the meantime though, Musk once again just threw a wrench in everyone’s plans… making the AI server race even more zesty than it already is. 

(Source: Giphy) 

So yeah, place your bets accordingly friends, and keep your eyes out for HPE. With everyone losing their minds over a strong labor market on Friday, one only wonders if an HPE surge is just waiting to be priced in next week. As always, stay safe and stay frosty! Until next time…

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Stocks.News holds positions in Dell Technologies as mentioned in the article.