HPE Stock Performance Linked to Memory Prices
Hewlett Packard Enterprise (HPE) is trading near $62, up about 160% over the past year. The company reported record revenue of $12.2 billion for fiscal Q3 2026 and raised its outlook for fiscal 2027. Much of this growth came from higher average selling prices rather than increased unit sales due to supply constraints in memory components like DDR5, DDR4, and NAND. HPE's gross margin reached a record high at 40%, driven by disciplined pricing strategies and an increased networking mix. However, management expects margins to moderate as AI systems take up more of the revenue mix and traditional server pricing normalizes. The Cloud & AI segment saw operating margins drop from 17% in Q3 2026 to a projected 13% for fiscal 2027. Despite concerns about margin compression, HPE has record orders and a large backlog, including a significant server deal with a hyperscaler customer. The company anticipates stronger unit volumes in the next quarter as supply improves.
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