Should You Buy, Sell or Hold HPE Stock After a 15.9% Rise in a Month?

Hewlett Packard Enterprise HPE has gained 15.9% in the past month, outperforming the Zacks Computer - Integrated Systems industry's return of 2.8%. This outperformance raises the question: Should investors accumulate HPE shares or book profits and exit the investment.

HPE One Month Price Performance Chart

Traction in Cloud Offerings Aids HPE

Hewlett Packard Enterprise is experiencing massive traction in its cloud offerings, which is reflected in the growth rate of its hybrid cloud segment. HPE’s Hybrid Cloud segment is experiencing 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.

Demand for HPE Servers Drives the Top Line

HPE’s server business grew 5.6% in the second quarter of fiscal 2025. It expects its third-quarter revenues to rise in mid-teens sequentially and fiscal 2025 server revenues to grow in low double digits, driven by large artificial intelligence (AI) deals and growth in AI systems.

Hewlett Packard Enterprise’s AI server business is driven by enterprises deploying compute-heavy infrastructure and AI factory proliferation, helping the company acquire more than $1.1 billion in net new order value and backlogs of $3.2 billion in AI systems in the second quarter of fiscal 2025.

HPE’s newly introduced ProLiant Gen 12 server platform, focused on performance improvement, security enhancement and direct liquid cooling technology, is a massive upgrade over its predecessors, making it capable of strengthening HPE’s competitive position in the server market.

HPE Gains From Expanding Partner Base

HPE is expanding its AI expertise through partnerships with leading companies, including NVIDIA NVDA, Arista Networks ANET and Microsoft MSFT. HPE and Arista Networks have been longstanding partners, with HPE benefiting from Arista’s stronger datacenter networking offering.

Hewlett Packard Enterprise has been in partnership with NVIDIA while foraying into the AI market. Together, the two companies released NVIDIA AI Computing by HPE, where they combined their expertise. HPE also combined NVIDIA NIM Agent Blueprints with HPE Private Cloud AI for multiple AI use cases.

Furthermore, Hewlett Packard Enterprise and Microsoft collaborated to develop Azure Stack HCI systems that also include artificial intelligence-based solutions. These collaborations with Arista, NVIDIA and Microsoft, along with HPE’s other AI initiatives, are adding to its top line.

HPE’s top and bottom lines are benefiting from its strong cloud and server offerings, while its partner base is filling the gap so HPE can foray into newer markets. The Zacks Consensus Estimates for HPE’s fiscal 2025 earnings is pegged at $1.91, which has been revised upward by a cent in the past seven days.

HPE Stock is Trading at a Discount

From a valuation standpoint, HPE trades at a forward price-to-sales ratio of 0.81, below the industry’s 3.59. The stock is trading at a discount as reflected by the Zacks Value Score of B.

HPE Forward 12 Month (P/S) Valuation Chart

Conclusion: Buy HPE Stock Now

HPE is benefiting from strong growth in the server and cloud space. Its discounted price gives investors an opportunity to buy this stock. HPE carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

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

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