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HPE (HPE): Assessing Valuation Following Analyst Upgrades and AI Growth Prospects

Simply Wall St · 08/25 12:45
If you have been keeping an eye on Hewlett Packard Enterprise (HPE) lately, you likely noticed the stock’s recent jump following a wave of bullish commentary from Wall Street heavyweights. This week, both Morgan Stanley and Evercore ISI shifted to a more upbeat stance, pointing to rising enterprise demand for AI-driven servers, networking gear, and data center solutions. In addition, HPE’s deepening partnership with NVIDIA and the upcoming Juniper Networks acquisition have become key narratives, signaling that HPE is aiming to secure a stronger foothold in the next phase of AI and digital infrastructure growth. Looking at the broader picture, HPE has quietly built momentum. The stock is up an impressive 20% over the past year, nearly 8% in the past month alone, and its three-year return stands at a market-beating 79%. Recent headlines also include product launches in AI computing and significant efforts in debt management, suggesting management is committed to maintaining progress. The stock’s gains this year have been steady rather than dramatic, but combined with optimistic analyst commentary and increased sector interest, momentum appears to be building. With earnings and more AI product milestones approaching, the key question now is whether HPE’s valuation is still catching up to potential future growth or if recent optimism has already been reflected in the share price.

Most Popular Narrative: 3.4% Undervalued

According to the community narrative, Hewlett Packard Enterprise is considered slightly undervalued, with analysts projecting a fair value modestly above its current price. This outlook reflects optimism for future financial and operational improvements.

HPE expects to achieve synergies of at least $450 million from the Juniper Networks acquisition within three years of closing. If the deal is approved and successfully integrated, this could enhance revenue and net margins. The company's focus on AI, with a significant backlog and pipeline of AI systems orders, suggests potential for substantial revenue growth in the second half of 2025 as inventory challenges are addressed and new product generations are deployed.

Curious how HPE’s future value rests on bold growth in AI and ambitious synergy targets? The narrative’s calculation blends rising profitability with a daring forecast for margins and earnings. Want to know the exact financial leaps analysts are banking on? These projections could reshape perceptions of what HPE is truly worth.

Result: Fair Value of $23.24 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, risks remain. These include regulatory hurdles for the Juniper deal and fierce pricing pressure in servers, factors that could change HPE's growth trajectory.

Find out about the key risks to this Hewlett Packard Enterprise narrative.

Another View: Discounted Cash Flow Analysis

Taking another approach, the SWS DCF model also points to Hewlett Packard Enterprise being currently undervalued. This method relies on projected cash flows rather than analyst forecasts. However, there is some uncertainty as to whether future earnings will actually align with these assumptions.

Look into how the SWS DCF model arrives at its fair value.
HPE Discounted Cash Flow as at Aug 2025
HPE Discounted Cash Flow as at Aug 2025
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Hewlett Packard Enterprise for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Hewlett Packard Enterprise Narrative

If you have a different perspective or want to dive deeper into the data, you can easily build your own narrative in just a few minutes. So why not do it your way?

A great starting point for your Hewlett Packard Enterprise research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.