Our Stock of the Week is Hewlett Packard Enterprise (HPE). We highlighted this name earlier this month, but as a reminder, over the past few years, HPE has transformed itself from a slow-growth legacy hardware company into a major player in enterprise data center and computing infrastructure, positioning itself as an “edge-to-cloud hybrid infrastructure” provider (meaning that it sells the computing, storage, and networking equipment that businesses use to run their operations locally, in the cloud, or some mix of both) with growing exposure to AI server demand, hybrid cloud, and networking. That transformation was driven by the 2025 acquisition of Juniper Networks (a networking equipment company known for routers, switches, and AI-driven software), which placed HPE in the middle of AI infrastructure buildout.
HPE’s pivot showed up in their results on June 1st, when the company reported a blowout fiscal Q2 2026, with revenue growing 40% year-over-year to $10.7 billion (vs. est. $9.79 billion), with adjusted earnings of $0.79 per share (vs. est. $0.53). Server revenue alone came in at $5.45 billion against expectations of $4.66 billion. The AI story has continued to develop, with HPE unveiling its ProLiant Compute DL394 Gen12 server (built on Nvidia’s Vera CPU for AI workloads) and landing a marquee deal with Vultr, alongside Nvidia, to build large-scale AI data centers.
While the sector’s multiples have come in some recently, tech valuations in general remain elevated. HPE’s multiples, however, still look reasonable. Analysts are projecting 54% EPS growth over the next twelve months, and with a trailing PE of 19x and a forward PE of 12x, the stock carries a forward price-to-earnings growth ratio of just 0.2 (a reading below 1.0 is generally considered undervalued), suggesting that the market may not be fully priced in the earnings acceleration now underway. The average analyst price target, meanwhile, is $70, and this morning (aug 31) BofA raised their price target to $82 from $80 ahead of earnings this Wednesday, September 2.
As luck would have it, HPE broke past the near-term lateral resistance level we highlighted on Aug 3, pushing back towards intraday highs in early June. Since then, shares have pulled back near that same prior resistance level around $50 as well as its 20-day moving average. As always, we’d avoid chasing any early strength on Monday morning, and would look to aggressively trade the stock around earnings on Wednesday.
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This post is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this post. Do not buy, sell, or trade the stocks mentioned herein. We WILL actively trade this stock differently than discussed herein. We will sell into strength and buy or sell at any time for any reason. We will actively trade into any unusual activity. At the time of this post, principals, employees, and affiliates of Shark Investing, Inc. and/or principals, clients, employees, and affiliates of Hammerhead Financial Strategies, LLC, directly or indirectly, controlled investment and/or trading accounts containing positions in HPE at the time this was published. To accommodate the objectives of these investing and/or trading accounts, the trading in these shares will be contrary to and/or inconsistent with the information contained in this posting.
