Hewlett Packard Enterprise (HPE) saw its shares climb sharply on Friday, trading at $37.33, up 9.9% in afternoon trading, as investors piled into hardware and networking names before a busy earnings season. The rally extended a strong May run for the stock, which has benefited from growing demand for artificial intelligence infrastructure and networking gear.
The surge comes as HPE prepares to report its fiscal second-quarter results on June 1, covering the period ended April 30. The earnings call will provide a critical test of whether the robust demand for AI servers and networking equipment is translating into revenue and margin growth for the company.
Analysts at Evercore ISI noted that hardware and networking stocks are well-positioned heading into earnings season, citing sustained spending on AI infrastructure and network upgrades. The firm highlighted Dell Technologies and HPE as companies likely to report upside and raise full-year guidance, naming Dell as its top pick.
The rally was broad-based, with Dell jumping approximately 16.6%, HP Inc. rising about 14.4%, and HPE advancing roughly 10.6% on Friday, according to market data. This suggests the move was less about HPE specifically and more about a broader rotation into legacy hardware names tied to AI spending.
Bernstein SocGen raised its price target on HPE to $35 from $21 this week, while maintaining a Market Perform rating. The firm cited stronger demand for traditional servers driven by agentic AI workloads—software systems that operate more independently and require greater computing power. Bernstein also noted that HPE could gain market share if Super Micro Computer loses ground.
HPE also has a networking narrative to support its stock. On May 20, the company announced that Gartner had named HPE a Leader in its 2026 Magic Quadrant for enterprise wired and wireless local-area network infrastructure. Sujai Hajela, HPE's executive vice president for campus and branch networking, said the recognition reflects "strong customer momentum" behind HPE's AI-native, self-driving networks.
A day later, HPE revealed that South Korean coworking company FASTFIVE had selected HPE Aruba Networking EdgeConnect SSE to enhance security and simplify IT operations across more than 60 office locations. FASTFIVE CIO Wookyung Kim said the system provides "visibility, consistency, and agility" as the company scales.
On the balance sheet front, HPE completed the sale of a 13.8% stake in H3C Technologies for approximately $986.8 million and expects to sell another 5.2% stake for about $370.4 million in the first half of 2026. Analysts have linked these moves to debt reduction following the Juniper acquisition.
Activist investor Elliott Investment Management reported holding 27.4 million HPE shares, valued at about $652.9 million, in its first-quarter 13F filing, adding another layer of shareholder scrutiny.
However, risks remain. Morgan Stanley analyst Erik Woodring warned this week that IT hardware valuations have reached stretched levels and that investors may be overlooking "the forest through the trees," with memory-chip inflation, supply shortages, and macro volatility creating margin and earnings risk in the second half. Memory chips are a key server component, and higher prices can squeeze profits if vendors cannot pass on costs.
As the June 1 earnings call approaches, HPE must demonstrate that AI server orders, Juniper and Aruba networking demand, and H3C cash proceeds can offset cost pressures and any potential slowdown in customer spending. The stock price has already moved significantly; now the earnings report needs to catch up.
