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Despite the appreciation in the share price, HPE trades at a discount. From a valuation standpoint, HPE trades at a forward price-to-sales ratio of 1.41, below the industry’s 5.17. The discounted valuation is also reflected by the Zacks Value Score of B.
HPE Forward 12-Month (P/S) Valuation Chart
Image Source: Zacks Investment Research
Given these factors, the question arises: Should investors accumulate HPE shares or book profits and exit the investment?
HPE Grows on the Back of AI and Cloud Demand
Hewlett Packard Enterprise views Artificial Intelligence (AI), Industrial Internet of Things (IoT) and distributed computing as important growth markets and is investing to align products and research and development (R&D) with these themes. HPE is positioning its compute, storage and networking portfolios to support data-intensive workloads from edge to cloud.
In the second quarter of fiscal 2026, Cloud & AI revenues were $7.7 billion, up 23% year over year, and management cited triple-digit growth in traditional server orders as customers modernize infrastructure and invest in AI inferencing. These two tailwinds caused a multiplier effect, driving the second quarter of fiscal 2026 revenues to reach $10.7 billion.
HPE is also benefiting directly from AI systems demand, entering the third quarter with $5.9 billion in AI Systems backlog. Private Cloud AI business continues to gain momentum as enterprises increasingly deploy AI workloads within their own infrastructure rather than relying solely on public cloud environments.
Management noted that customer investments in agentic AI and AI inferencing accelerated in the second quarter of fiscal 2026 and contributed to higher orders and backlog. HPE’s ability to package compute, storage, networking and services into pre-configured solutions can reduce deployment complexity for enterprises and sovereign customers.
If adoption continues, this initiative can support faster growth and a richer mix of software and services over the cycle. HPE is uniquely positioned as it is one of the few companies that provide networking solutions as part of wider AI infrastructure support. HPE’s self-driving networking capabilities, powered by agentic AI, further differentiate the portfolio. However, HPE faces competitive challenges as well.
HPE Grapples Amid the Rising Competition From Large Players
HPE competes with Super Micro Computer (SMCI - Free Report) , Dell Technologies (DELL - Free Report) and Cisco (CSCO - Free Report) in the AI infrastructure market. However, HPE’s ability to package compute, storage, networking and services into pre-configured solutions can reduce deployment complexity for enterprises and sovereign customers while giving it an edge over its competitors.
Super Micro Computer is on track to scale rack production capacity to more than 6,000 AI racks per month by the end of fiscal 2026, including 3,000 direct liquid cooling racks monthly. SMCI is already shipping 150kW AI racks in volume and preparing 250kW and 500kW rack solutions to support future high-density AI training and inference workloads.
Dell Technologies is a major supplier of servers and storage systems, with a broad customer base across enterprises and cloud providers. Its scale, established distribution and service offerings give it an edge in winning large contracts. Cisco has also taken $5.3 billion of hyperscaler AI infrastructure orders year to date in fiscal 2026 and raised its full-year order outlook to $9 billion from $5 billion.
However, HPE’s ability to package compute, storage, networking and services into pre-configured solutions can reduce deployment complexity for enterprises and sovereign customers. This gives HPE an edge over its competitors. The company is also able to keep its margin stable.
The Zacks Consensus Estimate for HPE’s fiscal 2026 margin suggests year-over-year growth of 75.8%. Estimates have remained unchanged for the past 60 days.
Image Source: Zacks Investment Research
Conclusion: Hold HPE Stock for Now
HPE’s strong exposure to the rapidly expanding AI infrastructure market, growing traction in traditional servers and strengthening networking portfolio make a compelling case for investors to accumulate the stock. Despite the competition from Super Micro Computer, Dell Technologies and Cisco, HPE remains well-positioned to benefit from the growing AI infrastructure market due to its broad portfolio. Given these factors, we suggest that investors should retain this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
Image: Bigstock
HPE Surges 21% in a Month: Should You Buy, Sell or Hold the Stock?
Key Takeaways
Hewlett Packard Enterprise (HPE - Free Report) shares have gained 21.4% in the past month, outperforming the Zacks Computer - Integrated Systems industry and the Zacks Computer and Technology sector’s decline of 13.9% and 2%, respectively.
HPE One-Month Price Performance Chart
Image Source: Zacks Investment Research
Despite the appreciation in the share price, HPE trades at a discount. From a valuation standpoint, HPE trades at a forward price-to-sales ratio of 1.41, below the industry’s 5.17. The discounted valuation is also reflected by the Zacks Value Score of B.
HPE Forward 12-Month (P/S) Valuation Chart
Image Source: Zacks Investment Research
Given these factors, the question arises: Should investors accumulate HPE shares or book profits and exit the investment?
HPE Grows on the Back of AI and Cloud Demand
Hewlett Packard Enterprise views Artificial Intelligence (AI), Industrial Internet of Things (IoT) and distributed computing as important growth markets and is investing to align products and research and development (R&D) with these themes. HPE is positioning its compute, storage and networking portfolios to support data-intensive workloads from edge to cloud.
In the second quarter of fiscal 2026, Cloud & AI revenues were $7.7 billion, up 23% year over year, and management cited triple-digit growth in traditional server orders as customers modernize infrastructure and invest in AI inferencing. These two tailwinds caused a multiplier effect, driving the second quarter of fiscal 2026 revenues to reach $10.7 billion.
HPE is also benefiting directly from AI systems demand, entering the third quarter with $5.9 billion in AI Systems backlog. Private Cloud AI business continues to gain momentum as enterprises increasingly deploy AI workloads within their own infrastructure rather than relying solely on public cloud environments.
Management noted that customer investments in agentic AI and AI inferencing accelerated in the second quarter of fiscal 2026 and contributed to higher orders and backlog. HPE’s ability to package compute, storage, networking and services into pre-configured solutions can reduce deployment complexity for enterprises and sovereign customers.
If adoption continues, this initiative can support faster growth and a richer mix of software and services over the cycle. HPE is uniquely positioned as it is one of the few companies that provide networking solutions as part of wider AI infrastructure support. HPE’s self-driving networking capabilities, powered by agentic AI, further differentiate the portfolio. However, HPE faces competitive challenges as well.
HPE Grapples Amid the Rising Competition From Large Players
HPE competes with Super Micro Computer (SMCI - Free Report) , Dell Technologies (DELL - Free Report) and Cisco (CSCO - Free Report) in the AI infrastructure market. However, HPE’s ability to package compute, storage, networking and services into pre-configured solutions can reduce deployment complexity for enterprises and sovereign customers while giving it an edge over its competitors.
Super Micro Computer is on track to scale rack production capacity to more than 6,000 AI racks per month by the end of fiscal 2026, including 3,000 direct liquid cooling racks monthly. SMCI is already shipping 150kW AI racks in volume and preparing 250kW and 500kW rack solutions to support future high-density AI training and inference workloads.
Dell Technologies is a major supplier of servers and storage systems, with a broad customer base across enterprises and cloud providers. Its scale, established distribution and service offerings give it an edge in winning large contracts. Cisco has also taken $5.3 billion of hyperscaler AI infrastructure orders year to date in fiscal 2026 and raised its full-year order outlook to $9 billion from $5 billion.
However, HPE’s ability to package compute, storage, networking and services into pre-configured solutions can reduce deployment complexity for enterprises and sovereign customers. This gives HPE an edge over its competitors. The company is also able to keep its margin stable.
The Zacks Consensus Estimate for HPE’s fiscal 2026 margin suggests year-over-year growth of 75.8%. Estimates have remained unchanged for the past 60 days.
Image Source: Zacks Investment Research
Conclusion: Hold HPE Stock for Now
HPE’s strong exposure to the rapidly expanding AI infrastructure market, growing traction in traditional servers and strengthening networking portfolio make a compelling case for investors to accumulate the stock. Despite the competition from Super Micro Computer, Dell Technologies and Cisco, HPE remains well-positioned to benefit from the growing AI infrastructure market due to its broad portfolio. Given these factors, we suggest that investors should retain this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.