Core Viewpoint - Hewlett Packard Enterprise (HPE) is experiencing mixed market sentiments with a recent upgrade from Citigroup but facing challenges due to rising memory prices impacting margins [1][2][3][6] Company Summary - Citigroup upgraded HPE's rating to "Positive" from "Buy," with the stock priced at $20.52 [1][6] - Morgan Stanley downgraded HPE from "overweight" to "equal weight," leading to a 7% drop in its stock price [2][3][6] - HPE's current stock price is $20.99, reflecting a 2.31% increase, with a market cap of approximately $27.69 billion [3][6] Industry Summary - Rising memory prices are creating a "pricing supercycle" for NAND and DRAM, which could negatively affect Original Equipment Manufacturers (OEMs) like HPE and Dell [2] - The memory price surge has particularly impacted Dell, resulting in a downgrade from "overweight" to "underweight" and a price target reduction from $144 to $110 [4] - Other companies like HP Inc and Lenovo also experienced share drops of up to 6% due to the memory price surge [4] - Morgan Stanley maintains a positive outlook on Pure Storage and Apple, indicating that not all companies are equally affected by the memory price surge [5]

Core Insights - Data center stocks experienced significant declines following Morgan Stanley's downgrade of seven hardware companies, including Dell and Hewlett Packard Enterprise (HPE) [1] - The downgrades reflect concerns over an unprecedented pricing "supercycle" affecting computer makers, driven by increased demand from hyperscalers [2] - Rising costs in DRAM and NAND memory are expected to pressure margins, with memory fulfillment rates potentially dropping to 40% in the next two quarters, posing risks to future earnings estimates [3] Group 1: Company Downgrades - Morgan Stanley downgraded Dell from overweight to underweight, resulting in an 8% drop in its stock price [1] - HPE was downgraded from overweight to equal weight, leading to a 7% decline in its stock price [1] - Other companies such as HP Inc, Asustek, and Pegatron were downgraded from equal weight to underweight, with share prices dipping up to 6% [2] Group 2: Market Dynamics - Analysts noted that the current environment is characterized by a pricing "supercycle" as hyperscalers drive demand for data center hardware, pushing valuations to all-time highs [2] - The impact of rising memory costs on margins is highlighted, with memory accounting for 10-70% of a product's bill of materials, indicating a significant risk to earnings estimates for the hardware sector [3]