Hewlett Packard Enterprise’s stock price is up 5% today, here’s why

Hewlett Packard Enterprise (HPE) shares rose nearly 5 percent after Barclays upgraded the stock to overweight from equal weight, raising its price target to $24 from $20.

Barclays says HPE stock lacks what it calls an “AI premium” seen with other tech names, making it an attractive option for investors, according to a research note from thefly.com.

A Barclays analyst says HP Enterprise will grow its AI server revenue, improve its storage and benefit from its pending acquisition of Juniper Networks.

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What does HPE do?

The original Hewlett-Packard was founded in 1939 by Bill Hewlett and David Packard. In 2015, the company split into 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 expanded into artificial intelligence.

In June, HPE announced new programs focused on artificial intelligence and hybrid cloud solutions in partnership with AI chip giant Nvidia. (NVDA)

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The updates focused on GreenLake, HPE’s hybrid cloud service that provides a cloud-like experience for organizations using their own IT infrastructure. GreenLake’s competitors 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 have jointly developed a turnkey private cloud for AI that will enable enterprises to focus their resources on developing new AI use cases that can increase productivity and unlock new revenue streams.” Antonio Neri, chief executive of HPE, said in a statement.

What does Barclays see?

Barclays analyst says HP Enterprise will increase revenue from AI servers, improve storage and benefit from Juniper Networks acquisition. (JNPR) which specializes in building native AI networks. The deal was announced in January and is expected to close in early 2025.

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HPE’s third-quarter financials, reported Sept. 4, showed earnings of 50 cents a share on revenue of $7.7 billion, up 2% and 10% from a year earlier. . 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 continued benefits from our cost management efforts. We are confident that we will finish the year strong and as a result are raising our EPS guidance,” said Marie Myers, HPE CFO.

Barclays, the London banking giant, is also a customer of HPE. On September 16, HPE said Barclays has signed a new agreement for private cloud services, making HPE GreenLake Cloud a key part of its hybrid cloud strategy. This deal extends their partnership, which began in 2021.

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