Hewlett Packard Enterprise (HPE) Pre-earnings Analysis
The artificial intelligence boom is reviving growth for legacy companies like HPE, especially as the company attacks the opportunity in full force. This isn’t the old Hewlett Packard we grew up with, the one selling servers and storage in a slow growth market. The new HPE is aggressively pivoting into AI systems, high performance computing, hybrid cloud, and AI networking, and the numbers finally show it.
How are they doing this?
The company has spent the last three years repositioning itself for AI workloads. They built high performance systems that run AI training, powered by Nvidia and AMD GPUs. Their GreenLake “AI cloud” service gives enterprises access to supercomputing as a service. And finally, their recent Juniper acquisition doubled their networking business.
HPE’s efforts are paying off. The company went from four years of flat growth (2020-2024) to averaging +17% growth per quarter over the past twelve months. But despite this, the stock has remained flat, returning little to its investors in 2025.
Could HPE be a winner in 2026?
Earnings data may be key to determine this. The focus is on further synergies from their acquisition and whether or not strong growth is expected to continue. Many fear that the AI boom cycle is slowing, HPE needs to provide strong guidance and revenue to win over investors. The company posted its strongest revenue growth in more than five years last quarter, another quarter like this could boost confidence and shares alike.
At $29.8B, HPE is a low cost and standout name that’s rapidly growing its AI capabilities. The company’s systems are the backbone of national labs, defense agencies, and other important corporations. Management has shown their ability to capitalize on the AI boom, which may reward them if growth projections remain strong.
Areas of opportunity:
The two biggest points HPE needs to address are profitability and free cash flow. The company’s revenue growth is notable, but margins are still thin. That leaves HPE at a price to earnings ratio of 27.7x, pretty high compared to competitors like Dell. The company must address this and provide strong profit guidance to alleviate the P/E. This quarter EPS has an ambitious target, if it can meet it, then it may provide confidence.
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