HPE's Hybrid Cloud Revenues Climb: What's Driving its Growth?

Hewlett Packard Enterprise’s HPE hybrid cloud segment is experiencing massive growth on the back of Alletra MP adoption, GreenLake cloud platform expansion, and enterprise AI use cases based on private cloud AI. The hybrid cloud segment grew 14.2% year over year in the third quarter of fiscal 2025.

Per its earnings call report, HPE was able to ship more than 5,000 Alletra MP arrays in 2025 and achieved triple-digit revenue growth. The company’s GreenLake cloud product is also experiencing rapid adoption. In the third quarter of fiscal 2025, HPE was able to add 2,000 new users, amassing a total number of 44,000 customers for its GreenLake cloud.

HPE is focusing on bringing more innovation to its cloud offerings. Recently, it launched HPE Hybrid Cloud Ops Suite, which integrates Morpheus, VM Essentials, OpsRamp, and Zerto. After the acquisition of Juniper Networks, HPE is focusing on combining hybrid cloud, AI and networking to enable its Hybrid Cloud segment to cross-sell and bundle its networking, server and storage offerings.

HPE is also experiencing strong momentum in AI Factory private cloud solutions as the number of private cloud AI customers grew two-fold sequentially in the third quarter of fiscal 2025. These factors are helping HPE grow its top line rapidly. The Zacks Consensus Estimate for HPE’s fiscal 2025 revenues is pegged at $34.54 billion, suggesting growth of 14.6%.

How Competitors Fare Against HPE

The global cloud space is led by other massive players like Amazon AMZN and Microsoft MSFT. Amazon, through its Amazon Web Services, dominates services, including compute, storage, AI/ML, and hybrid offerings like Outposts and EKS Anywhere.

Microsoft, on the other hand, has a strong presence among enterprises because of its Azure Stack. Microsoft’s collaboration with AI has equipped it with AI Factory-like deployments. However, HPE has an edge in this space as it differentiates itself with the integration of private cloud, AI factory and networking.

HPE’s Price Performance, Valuation and Estimates

Shares of Hewlett Packard Enterprise have gained 10.1% year to date compared with the Zacks Computer - Integrated Systems industry’s growth of 27.6%.

From a valuation standpoint, HPE trades at a forward price-to-sales ratio of 0.79, below the industry’s 3.52.

The Zacks Consensus Estimate for HPE’s fiscal 2025 earnings is pegged at $1.91 per share, which implies a decrease of 4% year over year. The consensus mark for fiscal 2026 is pegged at $2.34 per share, indicating a year-over-year increase of 22.7%. HPE's fiscal 2025 and fiscal 2026 earnings were revised upward in the past seven days.

HPE stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research