HPE’s 126% YTD Surge Is Underpriced—Here’s Why Wednesday’s Earnings Will Make Wall Street Regret Sleeping On It

Posted on by

(SeaPRwire) –   By: Lucas Caldwell

HPE’s stock has surged 126.6% year-to-date, but the market still isn’t fully pricing in its AI and infrastructure momentum. The company reports Q3 fiscal 2026 earnings on September 2 after market close, and the setup is more compelling than most investors realize. Analysts argue it’s undervalued—even with the huge run. This isn’t just another legacy hardware firm; AI is transforming it into a high-growth player, and Wednesday could be the catalyst that closes the valuation gap.

HPE’s Q3 guidance ranges from $11.5B to $12.1B in revenue, with non-GAAP EPS between 88 and 93 cents. Wall Street consensus sits at $12.1B—32% higher than the same quarter last year. Zacks’ estimate is 94 cents, a 113.6% YoY jump, and it’s been revised up in the past 30 days. HPE has beaten earnings estimates four quarters in a row, with an average surprise of 16%. That track record gives analysts confidence heading into Wednesday.

JPMorgan’s Joseph Cardoso expects HPE to raise full-year guidance, driven by AI and non-AI infrastructure demand. HPE’s AI Factory and Private Cloud AI, co-engineered with NVIDIA, are pushing order growth. The Juniper Networks acquisition expanded its networking portfolio—campus, data center switching, routing, security—all contributing to Q3. GreenLake, its consumption-based platform, got automation and monitoring boosts from Morpheus and OpsRamp acquisitions.

Despite the YTD surge, HPE’s valuation is way below peers. It trades at 13x forward earnings, while most peers are above 20x. Its forward price-to-sales ratio is 1.45x, compared to the industry average of 5.26x. Cardoso calls this a “highly digestible near-term risk-reward.” Since its last earnings, HPE stock dropped 10% even as the S&P 500 gained 1%—a disconnect that can’t last.

JPMorgan has an Overweight rating and a $70 price target on HPE. Its Q3 estimates are 93 cents adjusted EPS and $11.94B revenue. HPE generated strong operating and free cash flow in Q2, and it’s returning capital via dividends and buybacks. The market’s hesitation might stem from viewing HPE as legacy, but its AI push is redefining its growth trajectory—something investors can’t ignore much longer.

HPE’s Wednesday earnings beat will force Wall Street to reprice its valuation, closing the gap with AI-focused peers faster than most expect.

Author bio: Lucas Caldwell, a tech opinion leader with millions of followers on X/Twitter, covers enterprise infrastructure and AI hardware trends.