HP Enterprise rose about 1.5 percent today, continuing a steady climb that has pushed the stock up nearly 9 percent this week alone. We think this is mostly the whole market moving higher today, though the stock is also still riding a wave of optimism about demand for AI hardware.
Our view
The company is successfully shifting into high-margin networking and software, which makes the business much more valuable than its old hardware roots. If you have been thinking about buying it, this is still a fair price to pay for that long-term shift. Owners should sit tight.
Quantum computing partnership with Rigetti expands
The company is expanding its work with Rigetti to deliver a 9-qubit quantum system to the Pittsburgh Supercomputing Center. Quantum computing uses the principles of physics to solve problems too complex for today's most powerful computers, and this project combines that tech with traditional supercomputing. While this is a small research project funded by a government grant, it helps the company stay at the edge of high-performance computing. It shows how the business is positioning its hardware to handle the next generation of scientific workloads beyond standard AI.
The company has appointed David Goulden to its board of directors. He brings over 35 years of experience, most recently serving as the finance chief for Booking Holdings, the company that owns travel sites like Priceline and OpenTable.
Goulden will sit on the finance and investment committee. His background in managing the finances of a large, global technology firm is a logical fit as the company works to integrate its massive acquisition of Juniper Networks and improve its profit margins.
The stock rose after preliminary results from Super Micro suggested that demand for AI-powered servers remains very high. Because both companies sell the specialized hardware needed to run large AI models, strong numbers at one often signal a healthy market for the other.
This supports our view that the shift toward AI infrastructure is a real growth engine for the business. While the stock can be volatile, this confirms that the core market for AI-optimized data centers is still expanding quickly.
The U.S. Department of Energy has selected the company for multiple research and development projects. These projects focus on improving how AI models perform, making networking more efficient, and strengthening cybersecurity. Winning these government contracts helps cement the company's reputation as a key partner for high-level scientific work. While the immediate financial impact of these early-phase projects is small, they keep the company's technology at the center of national AI development.
Analysts issued a flurry of price target hikes and ratings in early June. Most experts are split, with 18 of 39 rating the stock a buy, and the average target of $69 suggests 30% upside from today's price.
Average target$69.27+30%vs $53.22 today
TodayAvg price
Low $62High $80
Hold39 analysts
1Bearish
20Neutral
18Bullish
FirmRatingPrice TargetDate
Argus Research
Buy
$30→$70
6/3/2026
Goldman Sachs
Buy
$32→$79
6/3/2026
Bernstein
Market Perform
$35→$62
6/2/2026
UBS
Neutral
$65
6/2/2026
Susquehanna
Neutral
$21→$65
6/2/2026
KeyBanc
—
$62
6/2/2026
Piper Sandler
Neutral
$23→$63
6/2/2026
Wells Fargo
Equal Weight
$26→$67
6/2/2026
Barclays
Overweight
$67
6/2/2026
Loop Capital Markets
Buy
$75
6/2/2026
RBC Capital
—
$70
6/2/2026
Morgan Stanley
Equal Weight
$71
6/2/2026
HP Enterprise earnings
The company has a very consistent habit of beating analyst targets, often by a wide margin, which suggests management is under-promising and over-delivering as the business grows.
Earnings history
EstimateBeatMiss
HP Enterprise past earnings results
Expected
Actual
Surprise
EPS
$0.54
$0.79
+47.7%
Revenue
$9.78B
$10.68B
+9.2%
Key highlights
Networking revenue more than doubles: Revenue for the networking division grew 148.2% to $2.7 billion compared to last year, largely due to the inclusion of Juniper Networks. This growth is critical as networking is the company's highest-margin segment and now accounts for roughly 25% of total sales.
AI server demand drives growth: The cloud and AI division saw sales rise 22.9% to $7.7 billion, fueled by a 32.7% jump in server revenue. Operating margins for this division reached 12.4%, up from 6.6% a year ago, showing the company is finding ways to make its AI business more profitable as it scales.
Record cash generation: Free cash flow, the money left after paying for business operations and equipment, reached $0.9 billion for the quarter, which is a significant $1.8 billion increase from the cash loss reported a year ago. This record second-quarter performance allowed the company to return $343 million to shareholders through dividends and buying back stock.
H3C stake sale complete: The company finished selling its remaining 19% stake in H3C Technologies on May 28, receiving $1.357 billion in cash. This exit from the China-based joint venture has brought in a total of $3.5 billion in cash since the plan was first announced.
Full year outlook raised: Management raised its 2026 revenue growth forecast to a range of 29% to 33%, up from previous targets. The company now expects to earn between $3.35 and $3.45 per share for the full year, a level of profit it previously thought would take until 2028 to reach.
Our take: A standout quarter that puts the company well ahead of its own long-term schedule. The massive boost from combining with Juniper Networks and the high demand for AI servers drove record cash flow and profitability. This performance validates the current strategy and strengthens the case for owning the stock as the business shifts toward higher-margin software and AI services.
