HPE's AI Platform Growth Drives Raymond James to Upgrade to Strong Buy

Hewlett Packard Enterprise (HPE) has been on a roll, with its AI platform growth catching the attention of analysts at Raymond James. The investment firm has upgraded its outlook for HPE to 'Strong Buy' and raised its price target to $29, reflecting the potential of the company's AI platform and strategic partnerships.

HPE's AI platform growth is nothing short of impressive. In fiscal 2023, the company reported a 25% year-over-year increase in HPC & AI segment revenue, driven by a record $3.6 billion in accelerated processing unit (APU) orders. This growth is a testament to the strong demand for AI solutions and HPE's ability to capitalize on market trends.

Raymond James' upgrade and price target increase are not merely based on HPE's recent performance; they are also a vote of confidence in the company's long-term growth prospects. HPE's AI-native architecture strategy, which simplifies deployment and consumption, addresses the unique demands of generative AI. This strategy, combined with HPE's collaboration with NVIDIA, positions the company well in the AI market.

HPE's strategic partnership with NVIDIA has been instrumental in driving the company's AI growth. The collaboration has resulted in the development of AI-native architecture and hybrid cloud offerings, enabling organizations to become AI-powered businesses. The partnership has also led to the introduction of a new AI enablement program, which offers competencies and resources across AI, compute, storage, networking, and hybrid cloud.

HPE's recent financial performance and guidance have further solidified Raymond James' bullish outlook. In fiscal 2023, HPE reported a 5.5% increase in total revenue, reaching $29.1 billion. The company's non-GAAP operating margin rose to 10.8%, up 20 points year-over-year, reflecting operational improvements and a pivot to higher-margin areas. HPE's AI segment revenue growth, coupled with its steady execution, resulted in record-breaking results in non-GAAP diluted net earnings per share and free cash flow.


As HPE continues to invest in its AI platform and strategic partnerships, it is well-positioned to capitalize on the growing demand for AI solutions. The company's strong financial performance, coupled with its innovative AI offerings, has earned it a 'Strong Buy' rating from Raymond James. With a projected annual revenue of $29.855 billion and non-GAAP EPS of $2.19, HPE's AI platform growth is expected to drive revenue and profit diversification, positioning the company for long-term profitability.