- What does the company do?
- Why Some Investors Are Bullish
- What Bears Are Worried About
- Why the Quants like this stock
- My View
What does the company do?
Hewlett Packard Enterprise (HPE) provides technology solutions worldwide, focusing on servers, hybrid cloud, networking, and financial services. Its offerings include HPE ProLiant servers, storage and cloud solutions through HPE GreenLake, and networking products such as Aruba and Juniper technologies. HPE serves businesses, large enterprises, and public-sector organizations through a broad network of partners and resellers. Founded in 1939, the company is headquartered in Spring, Texas.
Why Some Investors Are Bullish
- Record Q3 results — HPE reported record revenue of $12.2 billion, up 34% year over year, while non-GAAP EPS reached a record $1.11, well above the company’s prior guidance of $0.88–$0.93.
- Significant margin expansion — Non-GAAP gross margin reached a record 40.4%, up 10.5 percentage points from a year earlier, while operating margin rose to 16.2%. Non-GAAP operating profit increased 155% year over year to nearly $2 billion.
- Strong order growth and backlog — Orders increased 42% on a normalized basis, led by demand for servers, AI systems and networking. HPE said its backlog reached a record level, providing visibility into future revenue.
- Higher FY2026 and FY2027 outlook — HPE raised FY2026 non-GAAP EPS guidance to $3.75–$3.85 and free cash flow guidance to at least $3.75 billion. For FY2027, the company now expects 13%–17% revenue growth, 16%–20% non-GAAP EPS growth and at least $5 billion of free cash flow.
- AI and networking remain major growth drivers — Cloud & AI revenue rose 25.4% to $9.0 billion, while Networking revenue surged nearly 75% to $2.9 billion. HPE also generated $958 million of free cash flow during the quarter.
What Bears Are Worried About
- Expectations are now high — HPE’s strong results and higher guidance have raised expectations for continued growth. Management also said gross margins are expected to moderate toward more historical levels as AI systems become a larger part of the business.
- AI infrastructure growth requires substantial investment — HPE ended Q3 with $6.2 billion of cash and $20.2 billion of total debt, while inventory had risen to $11.8 billion. The company also had approximately $30.4 billion of unconditional purchase obligations, highlighting the capital and supply-chain commitments supporting its growth.
- Valuation and sustainability are important considerations — After a major run in the shares, investors may place greater emphasis on whether HPE can sustain its unusually strong revenue growth and margins. The company itself expects FY2027 growth to remain strong, but its guidance also assumes some normalization in margins and operating expenses.
Why the Quants like this stock
P/E Non-GAAP (FWD) B+ 14.83
PEG Non-GAAP (FWD) A 0.52
Revenue Growth (FWD) B+ 21.75%
EPS FWD Long Term Growth (3-5Y CAGR) B 28.44%
ROE Growth (FWD) A- 24.29%
3M Price Performance A- 17.16%
FY1 Up Revisions (last 90 days) 18 Up 0 Down
Latest Quarter’s Earnings
Announce Date 9/2/2026
EPS GAAP Actual $1.06 (Beat by $0.41)
EPS Normalized Actual $1.11 (Beat by $0.17)
Revenue Actual $12.21B
Revenue Surprise Beat by $218.91M
My View
HPE’s latest quarter showed record revenue, expanding margins, strong orders and higher financial targets, with AI infrastructure and networking driving much of the growth. The key question for investors is whether HPE can maintain this level of growth and profitability as comparisons become tougher and margins normalize.
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