HPE Cannot Build AI Servers Fast Enough. Is the Stock Still Cheap?
HPE has more than doubled this year on an AI server backlog that management says demand is outpacing by multiples, yet the stock still trades at a low-teens forward multiple. Here is whether that gap is an opportunity or a…
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Hewlett Packard Enterprise (NYSE:HPE | HPE Price Prediction) has roughly doubled in 2026, with shares up 117.7% year-to-date and 133.11% over the past year to $51.83. If you watched it climb from the low $20s and never bought, the question is whether the AI server story is now priced in or whether the setup that produced the move is still intact.
The company reported fiscal third-quarter revenue of $12.21 billion, up 32.72% year over year, with non-GAAP EPS of $1.11, beating the $0.93 estimate. Networking revenue rose 74.9%, and server revenue rose 35.3% on AI demand. CEO Antonio Neri said orders are “growing three and a half times faster than the revenue” in networking, and the company disclosed a post-quarter $3.5 billion inferencing deal with a hyperscaler.
Valuation After the Run
Even after the move, the multiple remains reasonable. Management raised full-year non-GAAP EPS guidance to $3.75 to $3.85, which puts HPE at roughly 14x forward earnings. The fiscal 2027 framework calls for EPS of $4.40 to $4.60 and free cash flow of at least $5 billion, which pulls the forward multiple lower still.
Compare that with Dell Technologies (NYSE:DELL), which trades at $492.20 after a 294.64% year-to-date gain, on FY27 non-GAAP EPS guidance of $25.50, and Super Micro Computer (NASDAQ:SMCI) at $37 against a $3.31 FY27 consensus. HPE is the cheapest of the three assemblers on forward earnings, and it earns a 40.4% non-GAAP gross margin compared with Supermicro’s 17.6% quarterly non-GAAP gross margin and Dell’s thinner AI-server mix.
Catalyst That Keeps Working
The reason to keep watching is that HPE’s constraint sits on the supply side. Neri told investors “supply constraints continue to affect our ability to fulfill the increased customer demand” and that the pipeline is “multiples of backlog.” DDR5, NAND, and HBM are the binding shortages, and Neri said this “is going to last for a longer period of time.”
That matters because the FY27 framework excludes the AMD Helios opportunity, which Neri described as a market measured in “tens of billions of dollars.” The expanded Oracle collaboration for multi-gigawatt AI infrastructure, which uses Juniper switching, also sits on top of the current guide, not inside it.
Where Downside Lives
The risks are real. HPE is buying scarce components ahead of shipment, which converts a revenue timing problem into balance-sheet exposure if AI order pricing softens before those parts ship. CFO Marie Myers cautioned that Q3 margins reflected “a confluence of everything coming together at once” and that mix will shift toward lower-margin AI systems.
FY27 revenue growth is guided to 13% to 17%, well below FY26’s 34% to 37%. And shares already fell 6.16% in the past week as investors digested the supply commentary, per Reuters’ coverage of the raised forecast.
Juniper integration is unfinished, and a stumble there would show up in networking margins the market is now paying up for.
Bottom Line
There is still a reasonable entry here. HPE trades at a low-teens multiple on FY26 earnings and a lower one on FY27, against a record backlog, a demand curve that has not peaked, and a hyperscaler deal signed after the quarter closed.
Dell offers more AI revenue at a richer multiple, and Supermicro offers cheaper trailing earnings with materially worse cash flow and governance risk. Among the three, HPE offers the most balanced risk-reward profile on the numbers.
For investors researching the name after missing the first leg, the current setup still offers a reasonable risk-reward, with supply-driven pullbacks likely to define the shape of any accumulation window. The same buildout powering HPE runs through the power, cooling, and networking suppliers we profiled in a free report on seven AI infrastructure names that aren’t chipmakers.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks.
