Morgan Stanley Upgrades Hewlett Packard Enterprise on AI and Networking Potential

Buy this tech services stock as positive catalysts start lining up, says Morgan Stanley

Hewlett Packard Enterprise should be due for more moves to the upside on the heels of its upcoming quarterly results, Morgan Stanley said Thursday. The firm upgraded the tech services company to overweight from equal weight and increased its price target by $6 to $28, implying 33% upside from Wednesday's close. This comes as shares have surged about 20% in the past three months, supported by a rise in shares following the closure of the company's acquisition of Juniper Networks in early July. "Our thesis is straight-forward - with the closure of JNPR, we see 18% upside to FY26 Consensus EPS, with EPS growing to $2.70-3.00 in FY27, and believe that as the market comes to better understand nearly half of HPE's business is networking, inclusive of more AI exposure (JNPR in xAI cluster), HPE's multiple will re-rate above the current 8x multiple," analyst Erik Woodring wrote in a Thursday note. HPE 3M mountain HPE, 3-month Looking ahead, shares could see support in the wake of HPE's third-quarter results after the bell on Sept. 3, the analyst said. He sees overall hardware spending growth decelerating in the second half of the year, leading him to favor names like HPE that have exposure to networking and artificial intelligence. "We believe the July quarter setup is most favorable for OWrated HPE, as the stock remains the cheapest of the group (at 8.5x times our FY26 EPS), AI expectations are low, and management should guide October quarter results decently ahead of Consensus, which is yet to incorporate the JNPR acquisition," he wrote. Woodring also believes that HPE's analyst day in October is the "most important upcoming catalyst," with the expectation that the company will provide longer-term forecasts that could "help the market more clearly appreciate HPE's future earnings/cash flow power." Wall Street is split on the name, however. While Woodring is in the camp of analysts with a bullish view, with 10 out of 20 having a strong buy or buy rating, the remaining 10 have stepped to the sidelines with a hold rating, per LSEG. Shares jumped about 3% in premarket trading on Thursday following the upgrade.

Hewlett Packard Enterprise Stock Gets Morgan Stanley Upgrade on AI Spending Boom

Morgan Stanley pointed to "healthy enterprise spending" for anything artificial intelligence- and network-related. Hewlett Packard Enterprise (HPE) shares advanced Thursday on an upgrade by Morgan Stanley, which sees increased corporate spending on the computer processing hardware maker's artificial intelligence (AI) and other products. Morgan Stanley raised its rating to "overweight" from "equal-weight," and boosted the price target to $28 from $22. In a note to clients, the analysts noted that "our checks signaled healthy enterprise spending across the board in the quarter, led by anything AI compute or networking related, followed by client devices (strong PC refresh), and then servers/storage, with networking growth inflecting positively for the first time in several quarters." They added that their research "leaves us positive on the potential for top and bottom line outperformance in the July quarter across the group." Along with the Hewlett Packard Enterprise moves, Morgan Stanley also increased the price targets for Dell Technologies (DELL) and NetApp (NTAP). With today's gains of more than 3%, shares of Hewlett Packard Enterprise moved into positive territory this year.