Hewlett Packard Enterprise (HPE) shares surged 5% after Barclays upgraded the stock to overweight from equal weight, raising the price target to $24 from $20.
Barclays says HPE stock does not have what it calls an “AI premium” seen with other tech names, making it an attractive option for investors, according to a research note pulled by thefly.com.
A Barclays analyst says HP Enterprise will grow its artificial intelligence server revenue, improve in storage, and benefit from the pending acquisition of Juniper Networks.
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What does HPE do?
The original Hewlett-Packard was established in 1939 by Bill Hewlett and David Packard. In 2015, the company split in two: The personal computer and printer divisions became HP Inc., while the enterprise segment became Hewlett Packard Enterprise.
HPE focuses on providing IT infrastructure, cloud services and enterprise solutions. The company has been expanding into artificial intelligence.
In June, HPE announced new programs focused on artificial intelligence and hybrid cloud solutions, partnering with AI-chip giant Nvidia. (NVDA)
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The updates centered on GreenLake, HPE’s hybrid cloud service, which provides a cloud-like experience for organizations using their own IT infrastructure. GreenLake’s rivals include Salesforce Platform, Amazon’s AWS and Microsoft’s Azure, according to g2.com.
“To unleash the immense potential of generative AI in the enterprise, HPE and Nvidia co-developed a turnkey private cloud for AI that will enable enterprises to focus their resources on developing new AI use cases that can boost productivity and unlock new revenue streams,” Antonio Neri, HPE’s chief executive, said in a statement.
What does Barclays see?
The Barclays analyst says HP Enterprise will grow its AI-server revenue, improve in storage, and benefit from its acquisition of Juniper Networks, (JNPR) which specializes in building AI-native networks. The deal was announced in January and is expected to close in early 2025.
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HPE’s third-quarter financials, reported on Sept. 4, showed earnings of 50 cents a share on revenue of $7.7 billion, up 2% and 10% from a year earlier, respectively. The performance was driven by strong growth in AI and cloud services.
“We are well positioned to capture share of the growing AI-infrastructure market and expect to see the continuing benefit of our cost management efforts. We are confident in finishing the year strong and are raising EPS guidance as a result,” said Marie Myers, HPE’s chief financial officer.
Barclays, the London banking giant, is also a client of HPE. On Sept. 16 HPE said Barclays signed a new deal for private cloud services, making HPE GreenLake Cloud a key part of its hybrid cloud strategy. This deal expands their partnership, which started in 2021.
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