We recently published a list of 10 Buzzing AI Stocks This Week. In this article, we are going to take a look at where Hewlett Packard Enterprise (NYSE:HPE) stands against other buzzing AI stocks this Week.
Paul Hickey, Bespoke Investment Group co-founder, said while talking to CNBC in a latest program that despite the market gains still concentrated in a few names, he’s bullish short and long term because of AI.
“The longer term play is the AI trade. This is an AI bull market. Every bull market has a theme, and ChatGPT was to AI what Netscape and AOL were to the internet.”
Hickey also mentioned the possible scenario where market gains would start to broaden out.
“ChatGPT didn’t invent AI; it made it tangible for consumers and businesses, just like Netscape with the internet. It caused, you know, made it a lot more practical on the part of businesses and the consumer. So I think in that respect, there’s a lot more investment to go, and we’ve seen the infrastructure stocks in AI benefit. But even just last week, some of these software names—and we’re going to slowly start to see that broaden out to the rest of the economy.”
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For this article, we picked 10 AI stocks currently buzzing on the back of latest news and analyst ratings. With each company we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A woman programmer in a modern office working with multiple computer servers.
Hewlett Packard Enterprise (NYSE:HPE)
Number of Hedge Fund Investors: 64
Talking about Hewlett Packard Enterprise (NYSE:HPE)’s latest results during a program on CNBC, Jim Cramer said he liked the quarter:
“I like the quarter very much. I think Antonio Neri is doing a terrific job. One thing people should recognize is that a lot of this comes from their AI business. They mentioned $6.7 billion in cumulative orders since Q1 for the fiscal year and a backlog of AI systems worth $3.5 billion.”
However, Cramer pointed to something he found “cryptic” in the earnings call:
“There was also something cryptic mentioned—they said they debooked a large order, $700 million, during the same quarter due to concerns with a specific customer. Everyone is now scrambling to figure out who that customer is.”
Wall Sreet is pitching on on Hewlett Packard Enterprise (NYSE:HPE)’s results.
Citi upgraded Hewlett Packard Enterprise (NYSE:HPE) to Buy from Neutral and raised its price target to $26 from $23, expecting the company to benefit from improving demand in server and enterprise networking, as well as expanding AI opportunities. “While AI orders and revenues can be lumpy, we see potential for a stronger contribution from enterprise AI and sovereigns, which bodes well for revenue momentum and margins moving forward,” Citi analyst Asiya Merchant wrote in a note to clients. “Along with an improved outlook for core enterprise infrastructure spending and potential EPS accretion from the Juniper acquisition, with management confident in closing the deal by early 2025, we are increasingly optimistic.”
Deutsche Bank analyst Matt Niknam had a more cautious view, describing the results and guidance as an “incremental positive in the context of the current valuation.” Hewlett Packard Enterprise (NYSE:HPE)’s server business is seeing momentum due to both AI and traditional servers, although AI servers are negatively impacting gross margins, which fell to 30.9%, the lowest level since Q4 2020, Niknam, who maintains a Hold rating and $22 price target, said.
Hewlett Packard Enterprise (NYSE:HPE)’s Hybrid Cloud segment provided “the bulk of the upside surprise this quarter,” while its Intelligent Edge (networking) business is relatively stable after a prolonged period of inventory digestion at customers. On the negative side, the forward guidance includes a sequential decline in AI server sales, partly due to delays from Hewlett Packard Enterprise (NYSE:HPE)’s Blackwell and “de-booking” to the tune of roughly $400 million, Niknam added.
“While the F1Q outlook effectively matches consensus pre-print, we still consider the results ‘good enough’ in light of a fairly discounted valuation (10x CY26E EPS) relative to HPE’s near-term growth prospects,” he wrote.
Overall, HPE ranks 10th on our list of buzzing AI stocks this Week. While we acknowledge the potential of HPE, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than HPE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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