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Hewlett Packard Enterprise (HPE)
NYSE:HPE

Hewlett Packard Enterprise (HPE) AI Stock Analysis

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HP

Hewlett Packard Enterprise

(NYSE:HPE)

Rating:69Neutral
Price Target:
$22.50
▲(5.44%Upside)
Hewlett Packard Enterprise's overall stock score reflects its robust financial performance, driven by consistent revenue growth and profitability. Positive earnings call results highlight strong AI and hybrid cloud growth, supporting future prospects. However, technical indicators suggest potential overbought conditions, and valuation metrics indicate modest attractiveness. Challenges in the server segment and cash flow management are notable risks, but strategic initiatives are in place to address these issues.
Positive Factors
Financial Performance
Hewlett Packard Enterprise reported strong F2Q results, beating on both top-line and bottom-line metrics.
Legal Settlement
Settlement with DoJ removes overhang on HPE stock, making set up more positive.
Strategic Partnerships
HPE's expanded partnership with NVIDIA marks a meaningful step forward in their AI monetization strategy, enhancing their relevance in GPU-dense workloads.
Negative Factors
Future Revenue Guidance
HPE’s strong F3Q revenue/EPS guide implies a weaker than expected F4Q.

Hewlett Packard Enterprise (HPE) vs. SPDR S&P 500 ETF (SPY)

Hewlett Packard Enterprise Business Overview & Revenue Model

Company DescriptionHewlett Packard Enterprise Company provides solutions that allow customers to capture, analyze, and act upon data seamlessly in the Americas, Europe, the Middle East, Africa, the Asia Pacific, and Japan. The company offers general purpose servers for multi-workload computing and workload-optimized servers; HPE ProLiant rack and tower servers; HPE BladeSystem and HPE Synergy; and solutions for secondary workloads and traditional tape, storage networking, and disk products, such as HPE Modular Storage Arrays and HPE XP. It also offers HPE Apollo and Cray products; and HPE Superdome Flex, HPE Nonstop, HPE Integrity, and HPE Edgeline products. In addition, the company provides HPE Aruba product portfolio that includes wired and wireless local area network hardware products, such as Wi-Fi access points, switches, routers, and sensors; HPE Aruba software and services comprising cloud-based management, network management, network access control, analytics and assurance, and location; and professional and support services, as well as as-a-service and consumption models for the intelligent edge portfolio of products. Further, it offers various leasing, financing, IT consumption, and utility programs and asset management services for customers to facilitate technology deployment models and the acquisition of complete IT solutions, including hardware, software, and services from Hewlett Packard Enterprise and others. Additionally, the company invests in communications and media solutions. It has a partnership with Striim, Inc. to offer high performance and mission-critical solutions with real-time analytics. It serves commercial and large enterprise groups, such as business and public sector enterprises; and through various partners comprising resellers, distribution partners, original equipment manufacturers, independent software vendors, systems integrators, and advisory firms. Hewlett Packard Enterprise Company was founded in 1939 and is headquartered in Houston, Texas.
How the Company Makes MoneyHewlett Packard Enterprise makes money through a diversified revenue model that includes the sale of hardware, software, and services. A significant portion of its revenue comes from its Hybrid IT segment, which includes servers, storage, and data center networking solutions. HPE also generates income through its Intelligent Edge segment, offering edge computing and IoT solutions, and its Financial Services segment, which provides leasing and financial management services. Additionally, HPE capitalizes on strategic partnerships with other technology firms and service providers, enhancing its product offerings and expanding its market reach. The company also offers subscription-based services and cloud solutions, creating recurring revenue streams that contribute to its financial performance.

Hewlett Packard Enterprise Key Performance Indicators (KPIs)

Any
Any
Operating Margin by Segment
Operating Margin by Segment
Indicates the efficiency and profitability of each business segment, helping investors assess which segments are most effectively converting revenue into profit.
Chart InsightsHewlett Packard Enterprise's server segment, despite a 30% revenue surge, faces profitability challenges due to pricing competition and inventory issues, with margins dropping to 8.1%. The Intelligent Edge segment shows resilience, maintaining strong margins and growth, driven by AI and GreenLake adoption. Hybrid Cloud's margin improvements reflect strategic focus, yet overall operating margins are pressured by tariffs and cost-saving measures, including workforce reductions. Investors should watch for how these strategic shifts and external pressures impact future profitability.
Data provided by:Main Street Data

Hewlett Packard Enterprise Earnings Call Summary

Earnings Call Date:Jun 04, 2025
(Q2-2025)
|
% Change Since: 20.50%|
Next Earnings Date:Sep 02, 2025
Earnings Call Sentiment Neutral
HPE delivered solid results with revenue and earnings exceeding guidance, driven by strong performances in AI, hybrid cloud, and GreenLake services. However, challenges remain in the server segment and cash flow management, alongside a significant goodwill impairment charge. The company is optimistic about future growth and operational improvements.
Q2-2025 Updates
Positive Updates
Revenue and Earnings Exceed Guidance
HPE's Q2 revenue was $7.6 billion, up 7% year-over-year, and non-GAAP diluted net earnings per share were $0.38, both above the high end of guidance.
Strong AI and Hybrid Cloud Performance
AI systems revenue increased, with $1.1 billion in net new orders and $1 billion converted into revenue. Hybrid cloud revenue grew 15% year-over-year, with Alletra MP platform showing triple-digit growth.
GreenLake and Intelligent Edge Growth
GreenLake's annualized revenue run rate increased 47% year-over-year to $2.2 billion. Intelligent Edge revenue grew 8% year-over-year, marking a return to growth after five quarters.
Cost Reduction and Operational Improvements
HPE made significant progress in its cost reduction program, leading to improved margins and operational efficiency with a workforce reduction of 5% expected by year-end.
Positive Developments in Networking
Networking orders grew high single digits year-over-year, driven by Wi-Fi 7 demand and enhanced capabilities in HPE Aruba Central.
Negative Updates
Server Segment Challenges
Server operating margin was 5.9%, and while improvements were made, further progress is needed to reach the target of 10% by year-end.
Free Cash Flow and Inventory Issues
Free cash flow was negative $847 million, impacted by inventory management challenges and the need for further reductions in inventory levels.
Non-Cash Goodwill Impairment Charge
A non-cash goodwill impairment charge of $1.4 billion was recorded, impacting GAAP diluted net loss per share, which stood at $0.82.
Company Guidance
During the Fiscal 2025 Second Quarter Hewlett Packard Enterprise Earnings Conference Call, the company reported a Q2 revenue of $7.6 billion, reflecting a 7% year-over-year increase, surpassing the high end of their guidance. Non-GAAP diluted net earnings per share reached $0.38, also above the high end of guidance. HPE's hybrid cloud segment saw double-digit growth for the third consecutive quarter, with strong performance in the HPE Alletra MP storage transition and HPE GreenLake cloud services. The company ended Q2 with a $3.2 billion AI systems backlog, signing $1.1 billion in net new orders, converting over $1 billion into revenue. HPE's annualized revenue run rate increased by 47% year-over-year to $2.2 billion, supported by AI and Intelligent Edge growth. The company plans to raise the low end of its non-GAAP diluted net earnings per share range by $0.08, projecting a 7% to 9% year-over-year revenue increase. Additionally, HPE is focused on executing corrective pricing actions in its server segment and expects server operating margins to recover to approximately 10% by the end of Q4.

Hewlett Packard Enterprise Financial Statement Overview

Summary
Hewlett Packard Enterprise demonstrates solid financial performance with consistent revenue growth and profitability. The balance sheet reflects a stable financial position with manageable leverage and good equity returns. Cash flow generation is strong, supporting operational needs and growth initiatives. However, monitoring cost management and enhancing cash flow efficiency could further strengthen its financial standing.
Income Statement
75
Positive
Hewlett Packard Enterprise shows a steady revenue growth with a 3.58% increase in TTM compared to the previous year. The Gross Profit Margin stands at 48.65%, indicating effective cost management. The Net Profit Margin of 8.86% is healthy, reflecting strong profitability. EBIT and EBITDA margins of 6.90% and 13.59% respectively, reveal solid operational efficiency. However, the slight decline in EBIT margin from 7.27% in the previous year suggests potential cost pressures.
Balance Sheet
68
Positive
The company maintains a moderate Debt-to-Equity Ratio of 0.71, showing a balanced leverage. The Return on Equity (ROE) is robust at 10.96%, demonstrating effective use of shareholders' equity to generate profits. The Equity Ratio of 35.86% indicates a stable financial structure, though slightly lower compared to industry peers, suggesting room for improvement in asset financing.
Cash Flow
70
Positive
Hewlett Packard Enterprise's Free Cash Flow grew by 10.24% in the TTM, highlighting strong cash generation capabilities. The Operating Cash Flow to Net Income Ratio of 1.41 reflects efficient cash conversion from earnings. The Free Cash Flow to Net Income Ratio of 0.79 indicates a healthy cash flow relative to profits, though there is room to enhance cash conversion efficiency.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue31.65B30.13B29.14B28.50B27.78B26.98B
Gross Profit7.34B9.84B10.24B9.51B9.38B8.47B
EBITDA2.67B5.02B5.06B4.78B4.85B4.26B
Net Income1.43B2.58B2.02B868.00M3.43B-322.00M
Balance Sheet
Total Assets67.85B71.26B57.15B57.12B57.70B54.02B
Cash, Cash Equivalents and Short-Term Investments11.67B14.85B4.27B4.16B4.00B4.23B
Total Debt17.53B18.25B13.52B12.46B13.45B15.94B
Total Liabilities43.99B46.38B35.91B37.21B37.68B37.92B
Stockholders Equity23.87B24.82B21.18B19.86B19.97B16.05B
Cash Flow
Free Cash Flow1.18B1.97B1.60B1.47B3.37B-143.00M
Operating Cash Flow2.33B4.34B4.43B4.59B5.87B2.24B
Investing Cash Flow42.00M-53.00M-3.28B-2.09B-2.80B-2.58B
Financing Cash Flow6.47B6.28B-1.36B-1.80B-3.36B883.00M

Hewlett Packard Enterprise Technical Analysis

Technical Analysis Sentiment
Positive
Last Price21.34
Price Trends
50DMA
17.64
Positive
100DMA
17.24
Positive
200DMA
19.01
Positive
Market Momentum
MACD
0.87
Negative
RSI
80.96
Negative
STOCH
92.38
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HPE, the sentiment is Positive. The current price of 21.34 is above the 20-day moving average (MA) of 18.60, above the 50-day MA of 17.64, and above the 200-day MA of 19.01, indicating a bullish trend. The MACD of 0.87 indicates Negative momentum. The RSI at 80.96 is Negative, neither overbought nor oversold. The STOCH value of 92.38 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HPE.

Hewlett Packard Enterprise Risk Analysis

Hewlett Packard Enterprise disclosed 32 risk factors in its most recent earnings report. Hewlett Packard Enterprise reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Hewlett Packard Enterprise Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
UIUI
74
Outperform
$25.65B46.73237.68%0.57%21.43%56.87%
72
Outperform
$274.71B28.4321.36%2.36%0.47%-17.77%
71
Outperform
$13.42B38.187.58%2.20%-2.56%52.05%
HPHPE
69
Neutral
$28.00B22.056.39%2.44%11.63%-24.41%
68
Neutral
$28.79B182.091.67%0.31%-2.08%
NONOK
65
Neutral
$27.91B34.605.70%3.98%-9.96%-6.83%
63
Neutral
$34.07B6.13-11.73%1.80%5.33%-18.31%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
HPE
Hewlett Packard Enterprise
21.34
1.04
5.12%
CSCO
Cisco Systems
69.37
24.54
54.74%
JNPR
Juniper Networks
39.95
3.90
10.82%
ERIC
Telefonaktiebolaget LM Ericsson
8.54
2.28
36.42%
NOK
Nokia
5.19
1.39
36.58%
UI
Ubiquiti Networks
423.97
273.73
182.20%

Hewlett Packard Enterprise Corporate Events

M&A TransactionsLegal Proceedings
Hewlett Packard Enterprise Completes Merger with Juniper
Neutral
Jul 2, 2025

On July 2, 2025, Hewlett Packard Enterprise announced the completion of its merger with Juniper, making Juniper a wholly owned subsidiary. The merger, valued at approximately $13.4 billion, was funded through a combination of cash, commercial paper issuances, and term loan credit facilities. The merger faced legal challenges when the U.S. Department of Justice sought to block it, but a settlement was reached requiring HPE to divest its Instant On business and conduct an auction for non-exclusive licensing of Juniper’s Mist AIOps source code.

The most recent analyst rating on (HPE) stock is a Hold with a $20.00 price target. To see the full list of analyst forecasts on Hewlett Packard Enterprise stock, see the HPE Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Hewlett Packard Enterprise Reports Q2 Revenue Growth
Neutral
Jun 3, 2025

Hewlett Packard Enterprise announced its financial results for the second quarter of fiscal year 2025, reporting a 6% increase in revenue to $7.6 billion compared to the previous year. Despite a solid performance in revenue growth across its product segments, the company faced challenges with a GAAP net loss per share of $(0.82) due to a non-cash impairment of legacy goodwill. HPE continues to focus on innovation and operational efficiency to enhance shareholder value, with an estimated revenue growth of 7% to 9% for fiscal 2025.

The most recent analyst rating on (HPE) stock is a Hold with a $20.00 price target. To see the full list of analyst forecasts on Hewlett Packard Enterprise stock, see the HPE Stock Forecast page.

DividendsBusiness Operations and Strategy
Hewlett Packard Enterprise Declares Dividend for Preferred Stock
Positive
Apr 30, 2025

On April 30, 2025, Hewlett Packard Enterprise‘s Board of Directors approved a cash dividend of $0.953125 per share for its Series C Mandatory Convertible Preferred Stock, payable on June 1, 2025. This decision reflects the company’s financial strategy and commitment to returning value to shareholders, with implications for investor confidence and market positioning.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 01, 2025