JPMorgan Bullish On Hewlett Packard Enterprise's Future, Cites 'Durable' Non-AI Segments, Capital Returns

JPMorgan analyst Samik Chatterjee modestly tweaked the revenue and margin outlook for Hewlett Packard Enterprise Co HPE following second-quarter results reported on Tuesday.

The company reported revenue of $7.63 billion, versus estimates of $8.17 billion and adjusted EPS of 38 cents, versus estimates of 41 cents.

Hewlett Packard Enterprise sees third-quarter revenue of $8.2 billion to $8.5 billion, versus estimates of $8.85 billion, and adjusted EPS of 40 cents to 45 cents per share, versus estimates of 56 cents per share.

The company expects 2025 revenue growth of 7% to 9% and raised the low end of its guidance for adjusted EPS to $1.78-$1.90 (from prior guidance of $1.70 to $1.90). Analysts are forecasting full-year earnings of $1.79 per share, according to Benzinga Pro.

The analyst writes that HP Enterprise delivered strong second-quarter results and guidance, effectively sidestepping intense AI server competition and broader macro concerns.

Management highlighted that AI server revenue beat expectations in the second quarter and is on track for a strong third quarter, reiterating their selective strategy for profitable AI deals, adds the analyst.

Chatterjee notes that management saw a limited slowdown in non-AI segments, with strong networking, storage, and traditional server demand, notably in North America.

Beyond cost focus, management signaled an appetite for capital returns and portfolio actions, potentially boosting investor enthusiasm, especially post-Elliott Investment Management involvement, says the analyst.

The analyst sees an EPS of 1.85 (versus a consensus of $1.80) for 2025 and $2.10 for 2026.

Investors can gain exposure to the stock via First Trust S&P 500 Diversified Dividend Aristocrats ETF KNGZ and Madison ETFs Trust Madison Covered Call ETF CVRD.

HPE Price Action: Hewlett Packard Enterprise shares are up 0.71% at $17.81 at publication on Wednesday.

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