HPE's Stock Surge Was Foreshadowed by Strong Order Growth
Over the past year, Hewlett Packard Enterprise (HPE) stock surged from around $24 to nearly $62, outperforming both the S&P 500 and several tech peers. This rise was largely foreshadowed in HPE’s order book rather than its profit line. The company reported significant growth in AI-related orders during fiscal Q1 2025, with a record backlog of $3.7 billion by fiscal Q3 2025. By the time the stock surge began, demand for networking infrastructure was evident, particularly highlighted by an Oracle contract announced alongside HPE’s fiscal Q3 2026 results. This deal involved deploying Juniper Networking routers and switches as part of a large AI cloud build-out. Despite strong order growth, supply constraints limited revenue realization. While the company's margins were under pressure—trailing twelve-month net margin was lower than historical averages—the stock still outperformed many peers. However, investors who bought based on orders rather than earnings saw returns that lagged behind those of Dell Technologies and other tech stocks.
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Topics: AI infrastructure HPE networking demand orders growth