HPE Network Led AI Pivot Has Worked but the Stock Has Caught Up
Hewlett Packard Enterprise | NYSE HPE | Update through Q3 fiscal 2026 | Rating Hold
Summary
I downgrade HPE from Buy to Hold. The company is executing better than my old thesis, but the current price of $60.76 leaves almost no base-case upside. 3Q FY 2026 revenue reached $12.2Bn, up 34% Y/Y, while non-GAAP EPS of $1.11 beat the $0.93 consensus by $0.18.
The operating thesis strengthened. Networking orders rose 36% on a normalized basis, Networks for AI orders reached $700Mn, and management raised the fiscal 2027 growth framework.
My base case uses $4.50 of fiscal 2027 EPS and a 15x terminal P/E, then discounts the future value at 10% to a present target of $61.
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