Hewlett Packard Enterprise Stock To $35?

October 23rd, 2025 by Trefis Team
-55.51%
Downside
24.54
Market
10.92
Trefis
HPE: Hewlett Packard Enterprise logo
HPE
Hewlett Packard Enterprise

Hewlett-Packard Enterprise (NYSE: HPE), a leading provider of data solutions, servers, and networking hardware, has seen its stock rise over 50% over the last six months, compared with the S&P 500’s 27% gain. A combination of strategic restructuring, shareholder-friendly initiatives, and growth in AI and cloud infrastructure is driving the momentum.

First, HPE is transforming its business through consolidation and innovation. The company has merged Juniper Networks’ services into its networking unit and created a Cloud & AI division, positioning itself to capture demand in high-growth enterprise IT sectors. Second, HPE is returning capital to shareholders. A 10% dividend increase and a $3 billion share repurchase expansion demonstrate confidence in the balance sheet while supporting the stock price. Third, the stock trades at a relatively low valuation. With a price-to-sales ratio of 0.9x, compared with 3.3x for the S&P 500, HPE could see upside from multiple expansion if execution and growth trends continue. Fourth, top-line momentum is picking up. Over the last 12 months, revenue grew 14%, reaching $33 billion, while recent quarterly revenue climbed 18.5% year-over-year to $9.1 billion. This growth, fueled by demand for hybrid cloud and AI-ready infrastructure, gives HPE a solid platform to build on.

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The Fundamental Tailwinds

We believe HPE is well-positioned to benefit from three powerful secular trends:

  1. AI Infrastructure Demand – As AI applications proliferate, enterprises need scalable, secure, and high-performance infrastructure. HPE’s positioning in AI servers and edge computing provides leverage to this growth wave.

  2. Hybrid Cloud Adoption – More enterprises are adopting hybrid IT strategies, blending on-premises and cloud environments. HPE’s GreenLake platform positions it competitively in this space.

  3. Shareholder Value Creation – A growing dividend, share buybacks, and restructuring focused on core segments could drive earnings growth and valuation rerating over time.

While margins are currently lower than the S&P 500 average, operating income of $2 billion and operating cash flow of $2.5 billion give HPE flexibility to invest in higher-margin opportunities while rewarding shareholders.

Historical Precedent: Upside After Volatility

HPE’s past recoveries highlight its ability to rebound strongly after market stress:

  • COVID-19 Pandemic: After falling 51.6% from its early 2020 peak, the stock fully recovered by April 2021.

  • 2022 Inflation Shock: HPE dropped 31.8% but recovered within 259 days, beating the broader market’s recovery timeline.

This resilience reflects both investor confidence and the company’s ability to navigate downturns and reaccelerate growth.

The Key Upside Drivers for HPE

  • AI & Cloud Transformation: Strategic realignment and investment in high-growth segments could accelerate earnings growth and support valuation expansion.

  • Attractive Valuation: Trading below 1x sales gives investors a relatively inexpensive entry point into the AI infrastructure boom.

  • Capital Returns: Dividend increases and share repurchases provide consistent support for the stock.

  • Margin Expansion Potential: As integration synergies with Juniper Networks kick in and operational efficiencies improve, profitability could rise from current low levels.

  • Market Sentiment: A sustained shift toward infrastructure and AI plays could make HPE a catch-up trade for investors seeking value in a growth-driven market.

What’s the Real Upside Potential?

At a current price of around $23, if HPE can maintain steady revenue growth and modestly expand margins, a valuation rerating toward 1.3x–1.5x sales could lift the stock into the $33–$38 range — translating to roughly 30%–50% upside from current levels.

This isn’t wishful thinking. It’s grounded in historical valuation ranges and the company’s ongoing strategic transformation, including the integration of Juniper Networks and the expansion of its AI-driven and hybrid cloud businesses. HPE offers something increasingly rare in today’s market — growth exposure at a value multiple.

Of course, risks remain. Competition in AI servers — particularly from players like Cisco Systems (NASDAQ: CSCO) — is intense, and successful integration will be key. Still, at current valuations, the risk/reward equation appears to favor investors.

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