Hewlett Packard Enterprise (HPE) faces a critical test this week after its stock fell 8.36% on Friday to close at $49.20, extending a three-day losing streak that wiped out gains from a recent post-earnings rally. The decline leaves the stock 23.42% below its June 2 high of $64.25, a sharp reversal for one of the most actively traded AI names last week.
Volatile Week After Strong Earnings
The sell-off is notable because it followed an earnings report that beat expectations. HPE reported fiscal Q2 revenue of $10.7 billion, up 40% year-over-year, with non-GAAP EPS of $0.79. The company raised its fiscal 2026 revenue growth outlook to 29%-33% and boosted its non-GAAP EPS guidance to $3.35-$3.45. Free cash flow is now expected to be at least $3.5 billion.
Shares surged 9.2% on Monday and jumped 19.47% on Tuesday after the report, but then gave back those gains over the next three sessions. For the week, HPE still finished up about 14% from $43.04 on May 29.
AI Infrastructure Demand Drives Growth
CEO Antonio Neri said customers are “modernizing their infrastructure and scaling AI,” driving demand for servers, networking gear, and other AI infrastructure. The Cloud & AI segment brought in $7.7 billion, up 22.9%, while server revenue rose 32.7% to $5.5 billion. Networking revenue soared 148.2% to $2.7 billion, fueled by the Juniper Networks acquisition and Catalyst cost synergies, according to CFO Marie Myers.
HPE guided Q3 revenue between $11.5 billion and $12.1 billion. The company now expects to hit part of its long-term plan two years ahead of schedule.
Analyst Caution and Market Context
Despite the strong numbers, at least 12 brokerages raised their price targets after the report, pushing the median target to $66 from $26.50. However, some analysts warn that enterprise clients may be pulling forward orders to beat rising prices, which could lead to a slowdown later. Passing on higher memory-chip costs may also be more difficult than investors anticipate.
The broader market also weighed on HPE. The S&P 500 fell 2.64% on Friday, and the Dow dropped 1.35%. HPE traded about 35.7 million shares on the session, significantly above its average volume.
Key Events Ahead
Investors will watch for the May consumer-price index from the Bureau of Labor Statistics on June 10, which could shift Treasury yields and growth-stock valuations. HPE also has its HPE Discover event on June 16, where CEO Neri will deliver a keynote and the company will hold an investor summit.
HPE’s story remains mixed. The company has expanded its AI and networking growth narrative, but the stock has shown that a better outlook doesn’t always translate into a straight-line upward move.
