Hewlett Packard Enterprise (HPE) Surges 19% in a Week — What to Watch For Next?

Hewlett Packard Enterprise (HPE) experienced a significant 19.4% increase in its share price over the course of one week, driven by the growth prospects in the artificial intelligence (AI) sector. Investor confidence was bolstered by Oracle Corp's announcement in a recent earnings call that it would continue to heavily invest in AI, prompting a surge in demand for HPE shares.

HPE is a leading technology company that offers business-focused IT infrastructure, software, and services, with a strong emphasis on servers and AI compute solutions designed for data centers, enterprise applications, and AI models.

In the previous quarter, HPE reported a remarkable 447% rise in net income attributable to shareholders, reaching $1.511 billion, compared to $276 million in the same period last year. Net revenues grew by 33.7% to $12.2 billion from $9.14 billion in the previous year, with cloud revenues accounting for $9 billion, or a 25.4% increase. Networking revenues climbed by 74.9% to $2.9 billion.

The company's optimistic outlook was evident in its guidance for the full fiscal year 2026, projecting a growth of 34 to 37% in revenues and a substantial acceleration in the networking segment by 73 to 74%. Moreover, HPE anticipates GAAP EPS of $2.93 to $3.03 and non-GAAP EPS of $3.75 to $3.85 for the fiscal year. For the fourth quarter, revenues are expected to reach $13.9 billion to $14.8 billion, with GAAP EPS of $1.12 to $1.22 and non-GAAP EPS of $1.20 to $1.30.

Institutional investors, including hedge funds, have shown strong support for companies benefiting from the AI boom, as reflected by the significant increase in the number of hedge fund holders and their collective holdings in HPE's stock. During the second quarter of the year, 85 hedge funds held positions in the stock, a marked 77.4% increase from 58 in the first quarter, with their combined holdings rising to $5.66 billion from $3.19 billion quarter-on-quarter.

Despite acknowledging HPE's investment potential, the author believes that other AI stocks may offer greater upside potential and lower downside risk. For readers interested in an AI stock that could benefit from Trump-era tariffs and the onshoring trend, the author recommends a free report on the best short-term AI stock.