HPE Stock Price Targets Raised After AI Drives Earnings Beat

After its quarterly earnings report showed strong growth in artificial intelligence (AI), HPE’s stock price increased on Wednesday to record highs. Analysts quickly increased their price targets and ratings as HPE’s impressive performance and optimistic outlook were revealed.

Chief Executive Antonio Neri has led HPE’s focus on using AI to its advantage, which has created significant growth opportunities as demand for tech products rises. By the end of April, the business had completed $4.6 billion in new AI system orders. Strategic partnerships with AI industry leader Nvidia (NASDAQ:NVDA) have strengthened HPE’s position in AI-driven solutions.

Neri mentioned the rising demand for AI in several consumer and commercial categories, emphasizing HPE’s advantages in implementing AI systems and providing differentiated cloud and networking storage services.

In the second fiscal quarter, HPE’s revenue from AI system products grew to $900 million, more than doubling to $7.2 billion, a 6.3% increase year over year. Despite the 19% decrease in earnings, HPE exceeded projections and strengthened investor confidence.

Analysts have adjusted their price targets because of HPE’s revised forecast and upbeat guidance. The average price target has been increased by $4 to $22 per share. This includes increases by analysts like Aaron Rakers of Wells Fargo, Matthew Sheerin of Stifel, and Mehdi Hosseini of Susquehanna.

However, some analysts have shown caution, pointing to inconsistent earnings results and a decline in the backlog of AI systems compared to rivals like Dell Technologies (NYSE:DELL). UBS analyst David Vogt highlighted a 9% fall in HPE’s AI systems backlog and mentioned Dell’s strong sales and backlog growth in the AI server market.

Even so, several analysts remain upbeat, including Wamsi Mohan of Bank of America Securities and Amit Daryanani of Evercore ISI, who both raised their price targets to $22.

Neri hinted at Nvidia CEO Jensen Huang’s attendance at HPE Discover Las Vegas on June 17th. He said that by streamlining enterprise adoption and deployment, innovative AI solutions could be anticipated.

A 12% increase in HPE shares to $19.68 per share occurred during Wednesday’s trading, extending its year-to-date gain to around 17%. Because investors are excited about HPE’s AI-powered growth trajectory, the stock reached an all-time high of $20.43 earlier in the session.