Hewlett Packard Enterprise (HPE) has packed several AI focused announcements into late October, from integrating its EdgeConnect networking platform with HPE Mist and HPE Aruba Central to broadening its HPE AI Factory offerings.
Investors have rewarded Hewlett Packard Enterprise’s AI push, with the share price up 3.58% over the last day and 28.80% over 90 days. The year to date share price return of 142.95% and 1 year total shareholder return of 147.21% point to strong momentum building around the story.
Scan Hewlett Packard Enterprise’s AI push against a curated set of infrastructure players by checking out 55 AI infrastructure stocks as potential peers participating in the same build out in compute and networking.
After a 143% year-to-date climb and a 1-year total return of 147%, Hewlett Packard Enterprise now trades at a double-digit discount to both analyst targets and intrinsic estimates. Is that gap a margin of safety or a warning flag?
Most Popular Narrative: 18% Undervalued
Against a last close of $58.72, the most followed narrative pegs Hewlett Packard Enterprise’s fair value around $72, leaving a wide gap that hinges on AI networking and recurring revenue actually flowing through to earnings.
The rapid adoption of AI and machine learning across industries is driving a significant increase in demand for high performance compute and networking infrastructure. Juniper's leading position in data center and AI networking, now part of Hewlett Packard Enterprise, is expected to expand HPE's total addressable market and support multi year topline revenue growth and margin expansion in higher value segments, which can feed into earnings over time.
See why 90 investors see Hewlett Packard Enterprise as 18% undervalued.
Result: Fair Value of $72.03 (UNDERVALUED)
Still, Hewlett Packard Enterprise’s story can unravel if AI networking orders fail to convert into revenue, or if Juniper integration synergies arrive more slowly than analysts anticipate.
Find out about the key risks to this Hewlett Packard Enterprise narrative.
Next Steps
Mixed signals on Hewlett Packard Enterprise so far, right? If that balance of risks and rewards feels finely poised, move quickly and weigh both sides through the 4 key rewards and 2 important warning signs.
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