Hewlett Packard Enterprise is ripping after its big earnings beat fueled by an ongoing artificial intelligence boom, but there is still plenty of upside ahead, according to Loop Capital. The investment firm upgraded the AI server name to buy from hold. It also hiked its price target on shares to $75 from $23, implying 60% upside from Monday's close. "Apr Q was a historic blowout quarter as Agentic and Inferencing adoption is triggering not only amplified revenue growth but [operating margin] expansion as well," Ananda Baruah said Tuesday in a note to clients. "Now that commercial inference investment has begun in earnest…we believe we could be at the front end of a 3-5 year growth expansion." Shares rose nearly 28% before the market's open on Tuesday after Hewlett Packard posted its largest beat on quarterly earnings since 2018. The beat was largely fueled by the strength of the firm's server unit amid accelerating AI adoption. The company reported adjusted earnings of 79 cents per share for the fiscal second quarter versus the 53 cents expected by analysts polled by LSEG. It also brought in $10.68 billion in revenue during the period, topping analysts' $9.79 billion consensus estimate. Hewlett Packard forecasted total revenue in the range of $11.5 billion to $12.1 billion for the current quarter. For fiscal 2026, revenue is expected to rise between 29% and 33% year over year, helped by projected networking revenue growth of 72% to 75%, the company said. The company's executives warned that supply chain constraints could limit revenue conversion through 2027, however. Still, Hewlett Packard's latest financial outlook bodes well for the trajectory of its shares, per Loop Capital. "If the current ... networking explosion transforms into a durable multi-year architecture overhaul rather than a cyclical surge, out-year estimates will see continued upward revisions," Baruah wrote. The Street is split on Hewlett Packard. Of the 22 analysts covering the hardware and software name, 11 have a buy or strong buy rating on the stock, while 11 have a hold on it, LSEG data shows. Shares are up 96% in the year to date.
