HPE Shares Surge 4.70% on AI Momentum, Cost-Cutting Measures

Hewlett Packard Enterprise (HPE) surged 4.70% on Wednesday, marking its third consecutive day of gains with a cumulative rise of 6.75% over three sessions. The stock hit an intraday high of 6.14% above its previous close, reaching its highest level since October 2025. This rally reflects investor optimism amid strategic momentum in HPE’s AI business and cost optimization initiatives.

Driving the upward trend is the company’s record-breaking performance in AI systems, which generated $1.6 billion in revenue during Q3 2025. This growth stems from the large-scale deployment of the GB200 AI system, a joint venture with NVIDIA, and a surge in sovereign and enterprise orders. HPE reported $2.1 billion in net new AI orders, with sovereign demand growing at a triple-digit annual rate. Strategic acquisitions, including Juniper Networks, have further strengthened its AI-native networking capabilities, positioning the company to compete in the rapidly expanding AI infrastructure market.

Operational efficiency remains a focal point as HPE announced a cost-cutting program involving 2,500 layoffs over 18 months. The initiative aims to deliver $350 million in savings by fiscal 2027, with 20% of benefits realized by 2025. CEO Antonio Neri acknowledged challenges in managing AI server inventory due to delays in adopting NVIDIA’s Blackwell GPUs, though the company has since resolved these issues. These measures underscore HPE’s commitment to streamlining operations while maintaining growth in high-margin AI solutions.

Strategic moves are not without hurdles. The $14 billion acquisition of Juniper Networks, expected to bolster HPE’s hybrid cloud and edge computing ambitions, faces a U.S. Department of Justice antitrust lawsuit. A trial is set for July 9, 2024, but HPE remains confident in the transaction’s long-term value, citing $450 million in annual synergies. Meanwhile, global supply chain adjustments are underway to mitigate potential impacts of U.S. tariffs on imports, with management preparing for pricing shifts if trade policies tighten.

Valuation metrics highlight HPE’s appeal as a growth stock. Trading at a forward price-to-sales ratio of 0.83—well below the industry average—its shares suggest undervaluation despite strong AI traction. Earnings projections, however, show mixed signals, with fiscal 2025 estimates declining 4% year-over-year but rebounding 22.7% in 2026. Analysts note that near-term volatility may persist as HPE navigates legal uncertainties and executes its restructuring plan, but long-term prospects remain tied to its dominance in AI-driven enterprise solutions.