HP Enterprise Stock Surges on AI Potential and Server Gains

HP Enterprise Bull Calls Grow as Barclays Sees AI Opportunity

The upgrade comes after Bank of America boosted its rating and price target for HPE last week, in part because of the company's AI strength. Hewlett Packard Enterprise (HPE) shares jumped Wednesday following an upgrade from Barclays on the information technology's strength in the booming artificial intelligence (AI) sector. Barclays raised its rating on HPE stock to "overweight" from "equal weight," and boosted the price target to $24 from $20. Shares were up nearly 5% to $19.80 in afternoon trading. Growing AI Server Sales The analysts said they expect HPE will continue to grow its AI server sales, improve in storage, and benefit from its $14 billion purchase of Juniper Networks (JNPR) announced in January. They added that amid signs of an enterprise business recovery, HPE could be "one of the best ways to invest in this emerging trend." The upgrade from Barclays comes after Bank of America boosted its rating and price target for HPE last week, in part because of the company's AI strength. Bank of America said HPE could hold a "command position" in AI adoption because of its "decades of expertise in liquid cooling (CRAY systems) and increased adoption of supercomputing." With Wednesday's gains, Hewlett Packard Enterprise shares are up close to 17% from the start of the year.

HP Enterprise stock upgraded as AI and server gains boost outlook - Barclays By Investing.com

The firm's analyst cited several reasons for the positive outlook on the company's stock, including an anticipated recovery in the enterprise server market, benefits from the company's focus on artificial intelligence (AI) servers, improvements in the storage business, and potential gains in the networking segment. The analyst noted that a detailed server model update led to the recognition of signs indicating a rebound in the enterprise server sector, prompting an upward revision of estimates for HPE in this area. Additionally, the company's AI server revenues were slightly raised last quarter, with HPE expected to maintain a marginally higher gross margin on AI servers compared to its competitors. In the storage domain, HP Enterprise's shift towards products based on its own intellectual property is expected to continue driving improvements. This strategic move is seen as a positive development for the company's storage business. The networking industry has faced challenges, but the analyst believes that the market has reached its lowest point. With the anticipated realization of cost synergies and the integration of HPE's assets, including Aruba, the analyst expects HP Enterprise to achieve a 13% accretion and gain market share. The upgrade and new price target reflect Barclays' confidence in HP Enterprise's strategic initiatives and market position, suggesting a favorable outlook for the company's financial performance. In other recent news, Hewlett Packard Enterprise (NYSE:HPE) has expanded its Aruba Networking Central platform, introducing new artificial intelligence (AI) insights and functionalities. The enhancement includes third-party network device monitoring for vendors such as Cisco (NASDAQ:CSCO), Juniper Networks (NYSE:JNPR), and Palo Alto Networks (NASDAQ:PANW). HPE's recent acquisition of Juniper Networks is anticipated to significantly reshape the company's revenue composition. Analyst firms such as Citi and BofA Securities have expressed expectations of considerable growth in the network segment's contribution to the adjusted operating income. HPE's third-quarter fiscal year 2024 revenue saw a 10% year-over-year increase, reaching $7.7 billion, with AI system revenues marking a 40% increase from the previous quarter, totaling $1.3 billion. However, the Hybrid Cloud and Intelligent Edge segments saw year-over-year revenue declines of 7% and 23%, respectively. BofA Securities has upgraded HPE to a Buy rating, expecting the new CFO, Marie Myers, to drive substantial cost reductions and foreseeing revenue and cost synergies following the Juniper acquisition. Evercore ISI maintains an In-Line rating, adjusting its forecast for the accretive value of Juniper to HPE, now anticipating a ~7% earnings boost in fiscal year 2025. Loop Capital Markets, while maintaining a neutral rating, recognizes HPE's strong quarter-over-quarter momentum in Gen AI server sales and the potential for the Juniper Networks acquisition to address margin concerns. These are the recent developments in HPE's operations and market performance. Barclays' upgrade of HP Enterprise (NYSE:HPE) to Overweight with a raised price target aligns with several key metrics and insights from InvestingPro. The company currently boasts a market capitalization of approximately $24.49 billion, which underscores its significant presence in the technology sector. Notably, HP Enterprise trades at an attractive P/E ratio of 13.29, indicating that it may be undervalued relative to its near-term earnings growth potential. This is further supported by the adjusted P/E ratio for the last twelve months as of Q3 2024, which stands at 11.98. The company's focus on profitability is evident, with analysts predicting that HP Enterprise will remain profitable this year, a prediction that is backed by its performance over the last twelve months. Moreover, HP Enterprise has a strong track record of returning value to shareholders, as highlighted by its high shareholder yield and a consistent history of dividend payments for 10 consecutive years. The dividend yield as of the most recent data stands at 2.75%, coupled with a dividend growth of 8.33% over the last twelve months as of Q3 2024. This commitment to shareholder returns is a positive signal for investors. InvestingPro Tips also highlight HP Enterprise's valuation, which implies a robust free cash flow yield, and its status as a prominent player in the Technology Hardware, Storage & Peripherals industry. For investors seeking additional insights, there are more InvestingPro Tips available at https://www.investing.com/pro/HPE, which could further inform investment decisions in the context of the company's strategic initiatives and market positioning.

Hewlett Packard Enterprise stock price jumped 5% today, here's why

Hewlett Packard Enterprise (HPE) shares surged 5% after Barclays upgraded the stock to overweight from equal weight, raising the price target to $24 from $20. Barclays says HPE stock does not have what it calls an "AI premium" seen with other tech names, making it an attractive option for investors, according to a research note pulled by thefly.com. What does HPE do? The original Hewlett-Packard was established in 1939 by Bill Hewlett and David Packard. In 2015, the company split in two: The personal computer and printer divisions became HP Inc., while the enterprise segment became Hewlett Packard Enterprise. HPE focuses on providing IT infrastructure, cloud services and enterprise solutions. The company has been expanding into artificial intelligence. In June, HPE announced new programs focused on artificial intelligence and hybrid cloud solutions, partnering with AI-chip giant Nvidia. (NVDA) Related: Nvidia CEO Jensen Huang just told investors what's next for the AI chipmaker The updates centered on GreenLake, HPE's hybrid cloud service, which provides a cloud-like experience for organizations using their own IT infrastructure. GreenLake's rivals include Salesforce Platform, Amazon's AWS and Microsoft's Azure, according to g2.com. "To unleash the immense potential of generative AI in the enterprise, HPE and Nvidia co-developed a turnkey private cloud for AI that will enable enterprises to focus their resources on developing new AI use cases that can boost productivity and unlock new revenue streams," Antonio Neri, HPE's chief executive, said in a statement. What does Barclays see? The Barclays analyst says HP Enterprise will grow its AI-server revenue, improve in storage, and benefit from its acquisition of Juniper Networks, (JNPR) which specializes in building AI-native networks. The deal was announced in January and is expected to close in early 2025. More AI Stocks: HPE's third-quarter financials, reported on Sept. 4, showed earnings of 50 cents a share on revenue of $7.7 billion, up 2% and 10% from a year earlier, respectively. The performance was driven by strong growth in AI and cloud services. "We are well positioned to capture share of the growing AI-infrastructure market and expect to see the continuing benefit of our cost management efforts. We are confident in finishing the year strong and are raising EPS guidance as a result," said Marie Myers, HPE's chief financial officer. Barclays, the London banking giant, is also a client of HPE. On Sept. 16 HPE said Barclays signed a new deal for private cloud services, making HPE GreenLake Cloud a key part of its hybrid cloud strategy. This deal expands their partnership, which started in 2021. Related: Veteran fund manager sees world of pain coming for stocks