HPE's Rally Ignited by Elliott's $1.5B Stake—Is This the Start of a Turnaround?

Let me tell you, folks, when Elliott Management enters a stock, you sit up and take notice. The activist investors behind the Dell turnaround and the Salesforce shake-up just dropped a $1.5 billion bomb on Hewlett Packard Enterprise (HPE), sending shares soaring 8.8% intraday last week. But here’s the thing: Is this a fleeting pop or the spark of a genuine turnaround? Let’s dig into the numbers and the risks.

The Elliott Effect: Can It Work for HPE?

Elliott’s $1.5 billion stake—now one of HPE’s top five holdings—came at a dire time. The stock had plummeted 30% year-to-date in 2025, dragged down by weak server margins, tariff headaches, and the DOJ’s antitrust lawsuit blocking its $14 billion Juniper Networks deal. But Elliott’s history is clear: they don’t just buy stocks for fun. They push for change.

Take Dell, where Elliott’s pressure led to a $25 billion buyout of public shareholders and a 300% stock surge since 2018. Or Salesforce, where Elliott’s demands for cost cuts and strategic focus helped turn a laggard into a contender. The question now is: Can HPE be the next Dell?

What’s Driving the Rally?

The immediate jump—peaking at 8.8% before settling to a 5-7% gain—reflects market optimism that Elliott will force HPE to tackle its problems head-on. Let’s break down the catalysts:

1. Cost Cuts & Focus: HPE’s profit warning in March 2025 and 3,000 job cuts hinted at deeper issues. Elliott could push for more drastic measures, like divesting non-core assets or slashing overhead.
2. Juniper’s Shadow: The stalled Juniper deal is a double-edged sword. While the DOJ’s lawsuit looms, a breakup fee could inject $2 billion into HPE’s coffers—cash that Elliott might redirect to shareholder returns or debt reduction.
3. AI Opportunity: Competitors like Dell and Cisco are dominating AI-driven data center demand. Elliott could pressure HPE to pivot its strategy to capture this growth, instead of clinging to legacy infrastructure.

The Red Flags You Can’t Ignore

Don’t get too excited yet. HPE’s challenges are real:
- Operational Struggles: Server margins are collapsing, and the company’s execution issues (like delayed Juniper integration) have investors nervous.
- Regulatory Risks: The DOJ’s antitrust case isn’t going away. If Juniper falls apart, HPE’s valuation could crater further.
- Valuation: Even after the rally, HPE’s market cap hovers around $20 billion. That’s tiny compared to Dell’s $75 billion, which Elliott helped boost.

The Bottom Line: A Risky Gamble with Potential

Here’s my take: Elliott’s involvement is a game-changer, but HPE’s path to recovery is rocky. The $1.5 billion stake—roughly 7-8% of its market cap—gives Elliott real leverage to demand action. If they push through cost cuts, pivot to AI, and salvage the Juniper fallout, this could be a steal at current prices.

But remember: HPE’s 30% YTD decline isn’t a typo. The stock is cheap for a reason. The DOJ’s lawsuit and execution missteps are real landmines.

Compare this to Dell, which Elliott turned around. Dell’s stock tripled since 2018, while HPE’s has been a disaster. If Elliott can replicate that magic, HPE’s $15 stock could climb to $25+ over the next two years. But if they fail, we’re looking at $10 or lower.

Final Verdict: A High-Reward, High-Risk Bet

If you’re a long-term investor with a stomach for volatility, this could be a contrarian play. But don’t dip a toe—only put money you can afford to lose. Elliott’s involvement adds urgency, but HPE’s problems are deep.

Stay tuned for Elliott’s next moves. They’ll either make HPE a winner… or a warning sign.

Action Plan:
- Watch for HPE’s Q2 earnings report. Any mention of strategic shifts or cost savings will send shares higher.
- Track the DOJ’s Juniper trial. A settlement or breakup fee could be a catalyst.
- Compare HPE’s moves to Dell’s post-Elliott playbook—cost cuts, dividends, and a focus on growth markets.

This isn’t a “buy and hold” stock. It’s a “watch and pray” story. Elliott’s stake is the spark—now we wait to see if it ignites a fire.

Stay tuned, stay hungry, and keep your eyes on the tape!