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Hewlett Packard Enterprise shed nearly 11% on September 14, closing at $55.41, after Evercore ISI pulled its bullish rating on the stock. Analyst Amit Daryanani moved HPE from “Outperform” to “In Line,” a Wall Street euphemism for “the easy money has been made.”
The timing stings. HPE had been one of the year’s best performers, climbing roughly 159% year-to-date through September 11 on the back of surging demand for AI-optimized servers and a Juniper Networks acquisition that actually went well. Now a single downgrade wiped out $6.68 per share in a single session.
A valuation problem, not a business problem
Daryanani kept his $65 price target intact, which tells you something important. Evercore isn’t arguing that HPE’s business is broken. It’s arguing that the stock got ahead of itself.
The math backs that up. HPE was trading at roughly 13 times fiscal 2027 earnings before the drop. Its five-year average multiple sits around 8 times. That’s a 60% premium to historical norms, which is a lot to pay even for a company riding the AI infrastructure wave.
HPE’s most recent quarterly results were genuinely strong. Revenue hit $12.21 billion for the July quarter, a 33.7% jump year-over-year. Management raised full-year guidance.
With fewer obvious catalysts on the horizon, the risk-reward math tilted enough to pull the buy rating.
Broader AI hardware sell-off adds pressure
HPE didn’t fall in isolation. The downgrade landed on a day when AI hardware stocks broadly took a beating, with names like Intel, AMD, and Marvell all facing selling pressure.
Two pieces of industry news contributed to the mood shift. Anthropic CEO Dario Amodei made comments suggesting a slowdown in the pace of AI model development. Separately, OpenAI confirmed that an IPO would not happen in 2026.
What HPE bulls still have going for them
The Juniper Networks acquisition gave HPE a credible networking business to complement its server and storage operations. Enterprise customers increasingly want to buy compute and networking from the same vendor, and HPE can now offer that full stack.
Revenue growth of nearly 34% is remarkable for a company that spent years as a slow-growth hardware vendor, and the raised guidance suggests management sees continued demand through the rest of the fiscal year.
At $55.41, the stock sits about 15% below Evercore’s maintained $65 price target.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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