Is HPE Stock Undervalued?

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The worry is that Hewlett Packard Enterprise (HPE) stock has had a big run and its growth is now fully paid for. The evidence shows it is not. At 29.1 times earnings, HPE stock trades below the 33.2 times multiple of the median S&P 500 Information Technology company. That looks cheap for how fast it is growing. HPE’s revenue rose 33.7% from a year earlier in the quarter ended July 2026. So where is that growth coming from?

Where HPE’s Growth Comes From

The table below details what Trefis’s screen checks for HPE, covering everything from its price against its earnings to its outlook.

Demand for traditional servers, AI systems, and networking is driving HPE’s growth, bringing in orders faster than the company can turn them into sales. Management said on the September 2 call that normalized orders in the July quarter rose 42% from a year earlier. HPE booked more orders than in any previous quarter, leaving it with a record backlog. Revenue in Cloud & AI, the segment that sells servers, AI systems and storage, rose 25%. Networking, which includes the Juniper Networks business HPE bought a year before the call, grew 10% on a normalized basis. Server revenue grew 35% from a year earlier. Juniper itself accounts for part of the 33.7% rise in total revenue, since the quarter a year earlier included little or none of its sales.

Management expects the demand to last. In its September 2 release, the company raised its revenue growth forecast for fiscal 2027 to 15% at the midpoint, up from 10% in June.

Is HPE’s Growth As Good As It Looks?

So far, yes. One-time gains are not lifting HPE’s profit. The company’s underlying income, which excludes unusual and one-time items, ran 5% higher than its reported net income over the latest twelve months. HPE has also avoided adding acquired assets over the past year. Goodwill and intangibles, which rise when a company buys another, fell 3%. So the profit is real, and HPE has made no big new purchase since Juniper.

HPE has also widened its lead over the sector, though Juniper helps. Over the twelve months to July 2025, HPE’s revenue grew 14.0%, compared with 11.3% for the median S&P 500 Information Technology company. This marks a far narrower lead than today’s. The latest twelve months include Juniper’s sales, while the year before held little or none.

Has HPE Stock Already Priced It In?

Partly. HPE traded at 15.0 times earnings at the end of June 2024 and at 21.7 times a year later. Since the end of March 2026 alone, its P/E has risen about 43%, so some of the growth has already been noticed.

Even so, a gap remains. HPE is still priced below the median S&P 500 Information Technology company on earnings, despite growing faster than it. Against the whole S&P 500, HPE costs more than the median company’s 23.0 times earnings, but its revenue grew faster than nine in ten S&P 500 companies over the latest twelve months.

What Could Make HPE Stock Go Down?

On our reading of the September call, a clear miss on revenue or a deep cut to the fiscal 2027 forecast within the next two quarters would undo the case for HPE. Either outcome would suggest that the backlog is not turning into sales, or that competitors are slowing HPE’s growth.

Our research flags a thinner profit margin as the top risk for December. Management said on the September 2 call that it expects the operating margin to fall from the July quarter, mainly because AI systems will make up more of Cloud & AI sales, and because of pricing. In HPE’s fiscal fourth-quarter report, expected in December 2026, watch the operating margin, the fiscal 2027 margin forecast and how fast its orders grew.

How To Act On HPE?

Not necessarily on Hewlett Packard Enterprise alone, if your goal is long-term wealth. Wealth is built by owning the companies that keep outperforming, the leaders of their industries, wherever they are. In Hewlett Packard Enterprise’s own industry, Dell Technologies stock rose 913% and Super Micro Computer stock rose 894% over the five years to October 2026, while Hewlett Packard Enterprise stock rose 378%.

Finding companies like these takes comparison across industries and sectors, and that is what the Trefis High Quality (HQ) Portfolio does. It holds 30 quality companies in equal weight and, since its inception in September 2020, has returned more than 105%, ahead of a benchmark that combines the S&P 500, S&P Mid-cap and Russell 2000. See how we find the leaders.

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