Hewlett Packard Enterprise Shares Surge on AI Demand. Is It Too Late to Buy the Stock?

Shares of Hewlett Packard Enterprise (NYSE: HPE) surged higher aft the institution reported beardown second-quarter results.

Not to beryllium confused with erstwhile genitor HP Inc., ticker awesome HPQ, which sells computers and printers, Hewlett Packard Enterprise is simply a large subordinate successful the endeavor information halfway and computing market, positioning itself arsenic an edge-to-cloud hybrid infrastructure leader. Like rival Dell, the institution is benefiting from a surge successful artificial quality (AI) infrastructure spending.

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With the banal up big, let's instrumentality a person look astatine its results to spot whether oregon not it's excessively precocious to bargain the AI stock.

Riding the AI question

HPE credited its beardown maturation and outlook to the convergence of networking and information successful the information halfway space, arsenic it helps customers standard their AI infrastructure with secure, high-performance networking. It is seeing peculiar spot successful the endeavor and sovereign spaces, portion noting that its customers are investing heavy successful agentic AI and inference.

For its fiscal Q2, which ended April 30, the company's gross surged 40% to $10.7 billion, helped by its acquisition of Juniper Networks. Cloud and AI gross jumped 23% to $7.7 billion, portion networking gross roseate 148%, oregon 10% connected a normalized basis, to $2.7 billion.

It said that networking orders roseate overmuch much rapidly than gross successful the quarter. Within the segment, normalized field and subdivision orders climbed much than 20%, portion endeavor information switching orders accrued astir 20%. Routing orders jumped astir 30%, portion information orders climbed by much than 15%.

HPE saw bully borderline expansion, with gross borderline climbing 810 ground points twelvemonth implicit twelvemonth to 36.5%. As a result, its adjusted net per stock (EPS) astir doubled from $0.41 to $0.79. That was good supra the company's outlook for adjusted EPS of betwixt $0.51 and $0.55.

The institution raised its full-year outlook and present expects gross maturation of 29% to 33%, up from a anterior outlook of 17% to 22% growth. Adjusted EPS is present expected to beryllium betwixt $3.35 and $3.45, supra its anterior $2.30 to $2.50 forecast.

It besides introduced fiscal 2027 guidance, projecting gross to turn by betwixt 8% and 12%. Adjusted EPS is expected to summation by betwixt 12% and 16%.

Is the banal a buy?

HPE is riding the AI infrastructure wave, though immoderate Wall Street analysts deliberation the institution is seeing a pull-forward successful request arsenic endeavor customers look to get up of rising prices. The institution said it is not seeing this, but it remains a imaginable risk.