A $1.2 Billion Reason to Buy HPE Stock
Wall Street's eyes were on Hewlett Packard Enterprise (HPE) on Wednesday, and for good reason. Ahead of its Networking Investor Day, the company announced a $1.2 billion artificial intelligence (AI) system order and raised its multi-year networking outlook, giving investors plenty to cheer about. The headline win came from Vultr, the world's largest privately held cloud infrastructure company, which placed a $1.2 billion order for AMD (AMD) Helios AI Rack systems. It's the first purchase of this new architecture, which pairs AMD Instinct processors with purpose-built HPE Networking scale-up switching and software.
HPE didn't stop there. In a concurrent regulatory filing, the company raised its fiscal 2027 Networking segment revenue growth forecast to between the high teens and low-20s percent. It also boosted its annual cost-synergy target from the Juniper Networks acquisition to $800 million by the end of fiscal 2028, up from at least $600 million, and projected Data Center Networking revenue to grow at a low-to-high 50s percent compound annual rate through fiscal 2029.
The timing couldn't be better. As AI clusters expand, high-throughput networking becomes critical to keep GPU compute from bottlenecking on interconnect speeds, making switching architecture an immediate beneficiary of cluster buildouts. Landing a large initial system win validates HPE's ability to monetize the Juniper integration and sell higher-margin infrastructure directly to cloud providers. Investors responded fast. HPE shares took off nearly 4%, hitting a new record high of $67.10 on Sept. 30. So, with fresh excitement surrounding the stock, here's a closer look at the company.
About Hewlett Packard Stock
Hewlett Packard Enterprise is the company that powers the infrastructure behind the modern digital world. Founded in 2015 after the historic split of Hewlett-Packard and headquartered in Houston, Texas, HPE builds the servers, storage, and networking gear that keep data centers, clouds, and AI workloads running at scale. Its roots stretch back even further, to the legendary 1939 garage startup of Bill Hewlett and Dave Packard, one of Silicon Valley's founding stories.
Today, HPE sells its offerings through the HPE GreenLake platform, a hybrid cloud service that lets businesses pay for technology as they use it. Its portfolio spans high-performance computing and AI systems and, following the Juniper Networks acquisition last year, a much bigger play in enterprise and data center networking. In short, HPE helps companies move, store, and make sense of their data, from the edge to the cloud. At an $84.81 billion market capitalization, HPE is one of Wall Street's hottest names right now.
Sitting at the heart of the AI boom, the company is riding a surge in demand for servers and high-performance networking infrastructure. The numbers speak for themselves. HPE shares have exploded 168% year-to-date (YTD) and about 160% over the past year, leaving the broader S&P 500 Index ($SPX) in the dust. The benchmark has advanced just 11.7% so far this year and 14% over the past twelve months. Even after hitting a record high on Wednesday, HPE stock is trading only 4.8% below its peak.
Inside Hewlett Packard’s Q3 Earnings Report
Hewlett Packard Enterprise reported fiscal third-quarter results on Sept. 2 that exceeded Wall Street expectations on revenue and earnings, with record figures across several metrics. For the quarter ended July 31, 2026, HPE posted record net revenue of $12.21 billion, up 34% year-over-year (YoY) and comfortably ahead of Wall Street's $12.02 billion forecast. The driver was an unprecedented surge in enterprise AI demand and server infrastructure.
CEO Antonio Neri said the quarter validates HPE's long-term pivot toward high-performance computing, hybrid cloud consumption, and modern networking architectures. Cloud & AI was the main growth engine, generating $9 billion in revenue, up 25.4% from the prior-year period. Servers led the way, rocketing 35.3% to $6.8 billion on robust enterprise adoption of AI systems and accelerated orders for accelerated computing platforms. Storage grew 10.2% to $1.3 billion, as customers kept embracing HPE Alletra MP and the proprietary IP offerings designed for data-intensive workloads.
The Networking segment was just as striking, with revenue of $2.9 billion, a staggering 75% jump YoY. Within that segment, Campus & Branch brought in $1.4 billion, up 31%. Data Center Networking stole the spotlight at $382 million, up 112.2%, more than doubling in a year. Profitability hit historic highs as operational efficiencies and a high-margin product mix kicked in. Non-GAAP gross margins surged to 40.4%, up roughly 1,050 basis points YoY.
Non-GAAP diluted EPS reached $1.11, beating the consensus estimate of $0.95 and crossing the $1.00 mark for the first time in the company's history. The cash story is strong too. Cash flow from operations hit $1.6 billion, up $0.3 billion from a year ago, and free cash flow reached $1 billion, up $0.2 billion. HPE returned $324 million to common shareholders through dividends and share repurchases. Looking ahead to fiscal 2026 fourth quarter, HPE expects revenue between $13.9 billion and $14.8 billion. It projects GAAP diluted net EPS of $1.12 to $1.22 and non-GAAP diluted net EPS of $1.20 to $1.30.
What Do Analysts Think About HPE Stock?
Analysts are mostly bullish on Hewlett Packard, but there's a clear split in the room. HPE stock holds a consensus “Moderate Buy” rating across 21 analysts. Ten rate it a “Strong Buy,” two a “Moderate Buy,” and nine prefer to wait it out with a “Hold.” When it comes to price targets, the gap is wide. The average target of $68.89 implies roughly 6% upside from here. The Street-high target of $88 sees the stock rallying as much as 35%.
On the date of publication, Anushka Mukherji did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.