Is HPE the Top Edge Computing Play? Hedge Funds Weigh In

The rise of edge computing—where data is processed closer to its source rather than in centralized clouds—has become a defining trend in enterprise technology. With 5G, AI, and iot driving demand for localized, low-latency infrastructure, hedge funds are increasingly focusing on companies positioned to capitalize on this shift. Hewlett Packard Enterprise (HPE) has emerged as a key player, but is it truly the best edge computing stock to buy according to institutional investors?

HPE’s Edge Computing Momentum: Strengths and Struggles

HPE’s Intelligent Edge segment, which includes networking hardware, software-defined infrastructure, and hybrid cloud solutions, reported $1.1 billion in revenue in Q1 2025—a 5% year-over-year decline but a 2% sequential improvement, signaling stabilization after post-pandemic backlog normalization. Key growth drivers include:
- SASE (Secure Access Service Edge) and data center switching, which grew at double-digit rates.
- Partnerships like its collaboration with T-Mobile to offer affordable networking solutions for small businesses.
- Innovations such as the HPE ProLiant DL110 Gen12 server, designed for telecom edge networks, and nanosecond-precise timing in its Aruba switches, critical for AI and 5G.

However, HPE faces headwinds:
- Margin pressures: Non-GAAP gross margins fell to 29.4% in Q1, down from 36.2% a year ago, due to AI server pricing wars and inventory overhang.
- Juniper Networks merger uncertainty: The $14 billion acquisition, blocked by the U.S. Department of Justice, faces a trial in July 2025. Success would unlock $450 million in synergies, but failure could leave HPE’s edge networking ambitions underfunded.

Hedge Fund Activity: Bullish Bets vs. Selective Sell-offs

HPE’s stock (HPE) is held by 66 hedge funds, according to Insider Monkey’s Q1 2025 analysis, ranking it 7th among top edge computing picks. Institutional ownership data reveals mixed sentiment:

• Bullish bets:
• Renaissance Technologies increased holdings by 331% to $61 million.
• Worldquant Millennium surged its position by 1,383%, highlighting confidence in HPE’s AI and hybrid cloud plays.

• Point72 boosted holdings by 452%, likely drawn to its leadership in edge-to-cloud platforms like HPE GreenLake (ARR up 46% to $2.1 billion).

• Bearish moves:

• Citadel Advisors cut holdings by 79%, citing margin risks and macroeconomic uncertainty.
• Two Sigma reduced its stake by 91%, possibly wary of regulatory hurdles and execution risks.

The Competition: Intel and Accenture Lead the Pack

While HPE ranks highly, other hedge fund favorites dominate the edge computing landscape:
1. Intel (INTC) (ranked 3rd):
- 83 hedge fund holders back its chipmaking prowess and edge-focused frameworks like OpenVINO.
- Its 18A manufacturing node and TSMC joint venture aim to reclaim semiconductor leadership.

1. Accenture (ACN) (ranked 5th):
2. 79 hedge funds support its consulting and AI integration services, which drive edge deployments for clients.

Both companies benefit from broader trends: the edge computing market is projected to grow to $380 billion by 2028 (IDC), with AI and IoT as key drivers.

Risks and Considerations

• Juniper’s fate: A DOJ win could force HPE to abandon the deal, stripping its edge networking capabilities.
• Margin recovery: HPE aims to save $350 million by 2027 through cost cuts, but execution is critical to offset pricing pressures.
• Competitor pressure: Cloud giants like AWS and Azure are expanding edge offerings, while NVIDIA (NVDA) dominates AI chip markets.

Conclusion: A Contender, But Not Yet the Champion

HPE deserves attention as a tier-one edge computing stock, thanks to its hybrid cloud leadership, AI infrastructure innovations, and strategic bets like the Juniper deal. Its GreenLake platform’s 46% ARR growth and Gen12 server efficiency gains (65% power reduction vs. prior models) are compelling.

However, the title of “best” hinges on factors that remain uncertain:
- A DOJ trial win for Juniper would solidify HPE’s edge networking footprint.
- Margin stabilization is critical to offset near-term pressures.
- Competitors like Intel and Accenture boast stronger balance sheets and broader industry reach.

For now, HPE is a high-potential, high-risk play. Hedge funds are divided, but those betting on long-term AI and edge infrastructure trends—particularly if the Juniper deal clears—may find it a rewarding bet. Investors should monitor the July DOJ ruling closely and watch for margin recovery signals in Q3 earnings.

In the edge computing race, HPE has the tools to lead—but it still needs to cross the finish line.