Is Hewlett Packard Enterprise Undervalued Amid Cloud and AI Momentum?

The question of whether Hewlett Packard Enterprise (HPE) is undervalued in 2025 hinges on a nuanced interplay between its valuation metrics and its strategic positioning in the cloud and AI sectors. While the company's financials show signs of dislocation relative to industry benchmarks, its recent operational and technological advancements suggest a compelling case for long-term investors.

Valuation Dislocation: A Tale of Contradictions

HPE's valuation metrics paint a mixed picture. As of November 2025, the stock trades at a P/E ratio of 24.66x, significantly below the 64.56x average of its cloud and AI peers but above the broader technology industry average of 21.96x. This discrepancy highlights a valuation gap: while HPE is cheaper than high-flying AI leaders like Nvidia (NVDA), which sports a P/E of 52x, it remains more expensive than the sector's historical norms.

The EV/EBITDA ratio further underscores this dislocation. HPE's EV/EBITDA of 10.57 is lower than Nvidia's 43.53 but higher than its 5-year average of 5.71 according to Intellectia AI. This suggests the market is pricing in conservative expectations for HPE's future profitability, despite its recent strategic wins. A proprietary Fair Ratio model, which adjusts for HPE's growth, risk profile, and margins, estimates a fair P/E of 44.44x, implying the stock is trading at a 45% discount to its intrinsic value.

Growth Catalysts: Cloud and AI as Tailwinds

HPE's undervaluation is not a reflection of stagnation but rather a mispricing of its growth potential. The company has made aggressive moves in hybrid cloud and edge computing, with its cloud segment growing 14.2% year-over-year in Q3 2025. This momentum is driven by demand for AI infrastructure, where HPE's partnerships with AI chipmakers and its acquisition of Juniper Networks have strengthened its networking capabilities.

The integration of Juniper has also unlocked synergies in HPE's AI infrastructure business, contributing to strong revenue and profit performance. Meanwhile, HPE's GreenLake cloud platform is gaining traction, offering enterprises a scalable, AI-optimized infrastructure that differentiates it from competitors like AWS and Microsoft Azure.

Peer Comparisons: A Discounted Position

When compared to peers, HPE's valuation appears even more compelling. For instance, Nvidia's Q4 2025 earnings exceeded expectations, with revenue surging to $39.3 billion, yet its P/E of 52x dwarfs HPE's 24.66x. Similarly, Amazon's AWS segment reported $33 billion in Q4 revenue according to Investopedia, but its valuation metrics remain opaque. HPE's forward P/E of 9.84 and EV/EBITDA of 7.16 suggest it is trading at a discount to both its historical performance and the sector's growth trajectory.

Risks and Considerations

Critics may point to HPE's high debt levels and cautious investor sentiment as headwinds. Its forward P/E of 15.4x according to Value Investing-significantly lower than the market average of 25.9x-reflects skepticism about margin recovery. However, HPE's strategic focus on high-margin cloud and AI services, coupled with its cost-cutting initiatives, positions it to deleverage and improve profitability over time.

Conclusion: A Mispriced Opportunity

HPE's valuation dislocation is not a flaw but a feature of its underappreciated growth story. While the stock trades at a discount to AI and cloud leaders, its strategic investments in hybrid cloud, edge computing, and AI infrastructure are laying the groundwork for long-term value creation. For investors willing to look beyond short-term volatility, HPE offers a compelling entry point in a sector poised for sustained growth.