Hewlett Packard Enterprise Company (NYSE:HPE) and Super Micro Computer, Inc. (NASDAQ:SMCI) are both selling the hardware behind AI inference and training, but their valuations imply different levels of risk. HPE trades near 14 times forward earnings, while Supermicro trades below 10 times.
The lower multiple is not automatically the bargain. Oracle’s decision to put HPE Juniper gear into its AI data centers showed how HPE can monetize networking alongside compute, while Supermicro’s giant order pipeline has already forced investors to ask how much fresh capital the growth will consume.
HPE’s broader model makes its earnings easier to underwrite
Hewlett Packard Enterprise Company’s fiscal third-quarter revenue rose 34% to a record $12.2 billion. GAAP gross margin reached 40.1%, up more than ten percentage points from a year earlier, and non-GAAP operating margin rose to 16.2%. AI systems orders increased more than 30% sequentially to $2.4 billion, backlog reached $6.8 billion, and HPE won a $3.5 billion hyperscaler inference-server deal after quarter end.
The margin comparison with Supermicro is not apples-to-apples because HPE also owns networking, services and other higher-margin businesses. That diversification is part of the attraction: Juniper gives HPE another way to monetize the same AI customer, and management plans to return at least 75% of fourth-quarter free cash flow to shareholders. The risks are slower hardware growth and Juniper integration. They could keep HPE valued like a mature infrastructure vendor.
Supermicro’s discount comes with unusually sharp risks
Super Micro Computer, Inc.’s fiscal fourth-quarter sales jumped to $11.1 billion from $5.8 billion a year earlier, while GAAP gross margin rebounded to 17.5% from 9.5%. Full-year revenue reached $39.1 billion, up 78%, and the company said it generated more than $60 billion of new orders during the year.
That growth makes a sub-10-times forward multiple look cheap. Fourth-quarter operating cash flow was positive $747 million, showing the model can generate cash when customer mix and working capital cooperate. The risk is that AI-server economics remain volatile. Fiscal-year gross margin was only 10.8%, and Supermicro ended June with $8.7 billion of bank debt and convertible notes. Its auditor also issued an adverse opinion on internal control over financial reporting as of June 30, adding a reporting risk that the multiple alone does not capture.
Hedge-fund participation rose for both stocks in Q2. Insider Monkey’s database counted 85 HPE holders, up from 58 in Q1, while Elliott Management increased its stake 18% to 32.3 million shares. Supermicro rose to 62 holders from 49. Its August 31 short interest was 93.4 million shares, roughly 17% of float with 2.3 days to cover, although convertible financing can make the raw figure overstate directional bearishness.
Supermicro offers greater upside if margins stabilize and control weaknesses are remediated. HPE is the stronger risk-adjusted choice because its modest valuation comes with improving profitability, broader customer monetization and less dependence on ultra-low-margin server growth.
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