Shares of Hewlett Packard Enterprise (HPE) vaulted 10.6% on Friday to close at $37.58, reaching an intraday high of $37.75. The rally capped a weekly gain of roughly 13.5% and pushed the company's market capitalization to nearly $51 billion. The move comes as U.S. markets prepare to close Monday for Memorial Day, with trading resuming Tuesday.
Activist Investor Elliott Increases Stake
Elliott Investment Management, the activist hedge fund, disclosed a significantly larger position in HPE in its latest 13F filing with the SEC on May 15. The fund reported holding 27.4 million shares as of March 31, up from 18.6 million shares at the end of December. While 13F filings reflect positions as of quarter-end with a lag, the news has reignited investor focus on Elliott's influence at HPE.
HPE and Elliott have been in dialogue for months. In July 2025, the company agreed to appoint tech veteran Robert Calderoni to its board and formed a Strategy Committee to evaluate business lines and value-creation opportunities. At the time, Elliott's Jason Genrich expressed confidence in "substantial value ahead" and noted that Calderoni's role could help unlock "meaningful operational and strategic opportunities."
Networking Revenue Surges on Juniper Integration
HPE's networking business has become a central driver of the stock's momentum. In the fiscal first quarter (ended January 31), networking revenue soared 151.5% year-over-year to $2.7 billion, largely reflecting the integration of Juniper Networks, which HPE acquired in a $14 billion deal completed in early 2025. In contrast, the Cloud & AI segment, which includes servers and storage, posted a 2.7% decline to $6.3 billion. Free cash flow for the quarter was $708 million.
CEO Antonio Neri described the January quarter as "one of our most profitable quarters on record," noting double-digit order growth across all segments. CFO Marie Myers highlighted "prudent cost management" and said synergies from the Juniper and Catalyst acquisitions are running ahead of schedule.
Market Context and Broader Rally
HPE's gains outpaced the broader market on Friday. The S&P 500 advanced 0.37%, while the Dow Jones Industrial Average set a new record, according to Reuters. PC makers Dell Technologies (DELL) and HP Inc (HPQ) also rose after Lenovo reported strong earnings. Dell surged about 17%, while Cisco Systems (CSCO), a rival in networking gear, gained 1.9%.
The tech sector broadly benefited from positive sentiment, but HPE's outperformance reflects specific catalysts tied to activist pressure and its repositioning as an AI-infrastructure play.
Earnings Ahead and Supply Chain Risks
HPE is set to report fiscal second-quarter results after the bell on June 1, with an earnings call scheduled for 5 p.m. ET. Analysts will be watching for updates on margins, pricing, and the pace of AI-order conversion into revenue. The company has warned about tight supply and higher costs for DRAM and NAND memory, with Neri cautioning that these issues could persist into 2027. Server revenue declined in the January quarter, adding to concerns about near-term profitability.
Bulls are focusing on two key themes: the potential for continued activist-driven capital returns and portfolio optimization, and the networking business's ability to provide a more direct AI-infrastructure angle, reducing reliance on cyclical server sales. Tuesday's trading will be the first test of whether Friday's surge was a pre-holiday anomaly or the start of a sustained rerating.
