Can HPE Keep Rising Through 2025? The U.S. Government May Decide

Core Viewpoint - Hewlett Packard Enterprise (HPE) has shown a solid total return of 25% in 2024, driven by its focus on enterprise data and IT infrastructure solutions, particularly in the growing AI market [3]. Financial Performance - HPE's total revenues have stagnated over the past two years, with Q3 2024 revenues slightly down from Q1 2023 [5]. - The server business has experienced significant growth, with revenue growth of 18% in Q2 and 35% in Q3 [5]. - AI-related products and services generated $1.3 billion in revenue in Q3, over three times the amount from Q1, with a strong AI systems backlog of$3.4 billion [6]. Product and Service Development - HPE GreenLake, a hybrid cloud solution, has seen a 37% increase in customer adoption since Q3 2023 [8]. - The platform allows customers to choose services, shifting from a hardware sales model to a "pay-as-you-go" model, with 71% of its annualized revenue now coming from software and services [9]. - The introduction of HPE Private Cloud AI, co-developed with NVIDIA, is generating strong interest for developing generative AI applications [11]. Strategic Moves - HPE's acquisition of Juniper Networks aims to enhance networking infrastructure for AI workloads and hybrid cloud performance, potentially boosting competitive edge [12]. - Concerns exist regarding a possible challenge from the Department of Justice (DOJ) that could delay the acquisition, which could impact market sentiment [13]. Analyst Sentiment - Analysts at Raymond James have a Strong Buy rating on HPE with a price target of $29, indicating a potential 40% upside from the current price [4]. - Despite a current "Hold" rating among analysts, there is optimism regarding HPE's future performance if strategic moves, such as the Juniper acquisition, proceed successfully [16].