Hewlett Packard Enterprise (HPE) on Wednesday won an upgrade to a buy-type rating from Barclays on views that demand for data center servers processing artificial intelligence workloads will drive revenue growth. HPE stock rose in late morning trades.
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Barclays analyst Tim Long upgraded the computer and networking company to overweight from equal weight.
“We believe that HPE will continue to grow its AI server revenues, improve in storage, and we like the accretion from the Juniper deal,” Long said in a report. “We are seeing early signs of an enterprise recovery and believe HPE is one of the best ways to invest in this emerging trend since the stock lacks an artificial intelligence premium versus other hardware names.”
On the stock market today, HPE stock popped more than 4% to 19.82.
HPE Stock Boosted By AI Server Growth
Long added: “Despite HPE’s conservatism around AI opportunities, the company is accelerating orders and revenue in the vertical. Last quarter AI server orders were up 167% (sequentially) and revenue was up 40%. We expect AI server revenue to grow sequentially more than 30% next quarter as well.”
HPE stock has gained 17% in 2024 with Wednesday’s advance. The stock had pulled back in early September on an equity offering to fund the $14 billion Juniper acquisition.
With Wednesday’s move, HPE stock trades above its 50-day moving average. Also, robust data-center AI server sales helped rival Dell Technologies (DELL) beat expectations for its fiscal second quarter.
Also, HPE stock holds a Relative Strength Rating of only 35 out of a best-possible 99, according to IBD Stock Checkup.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
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