HPE Stock Upgraded by Morgan Stanley on AI and Juniper Bet
Investment bank raises price target to $28, citing the tech giant's major push into AI networking and enterprise spending.
Hewlett Packard Enterprise (HPE) shares saw a more than 2% jump after Morgan Stanley upgraded the stock to 'Overweight' from 'Equal Weight,' signaling strong confidence in the company's strategic direction. The investment bank also increased its price target on HPE to $28 from $22 per share, pointing to significant upside from the burgeoning enterprise AI sector and the company's transformative acquisition of Juniper Networks.
The upgrade reflects a bullish outlook on corporate hardware spending, particularly in AI computing and networking infrastructure. According to the analysts, healthy enterprise spending is creating a favorable environment for hardware providers. This sentiment extends beyond HPE, as Morgan Stanley also raised price targets for competitors like Dell Technologies and NetApp, indicating a broad-based positive trend in the sector.
A key catalyst behind the optimistic rating is HPE's pending $14 billion, all-cash acquisition of Juniper Networks. This strategic move is set to double HPE's networking business, positioning it as a more formidable competitor to industry leaders like Cisco. The acquisition is central to HPE's strategy to pivot towards higher-growth, higher-margin areas, focusing on AI-native and hybrid cloud solutions.
By integrating Juniper's AI-driven networking portfolio, including its respected Mist AI platform, HPE aims to deliver a unified, intelligent network experience that spans from the data center to the network edge. Analysts believe this combination will not only accelerate innovation but also be financially beneficial, with the transaction expected to be accretive to HPE's non-GAAP earnings per share and free cash flow within the first year after closing.
The move comes as enterprises globally are ramping up investments in the foundational infrastructure required to support artificial intelligence workloads. Morgan Stanley's note highlights that the combined HPE and Juniper entity will be well-positioned to capture this demand, offering a comprehensive portfolio that addresses the critical needs of modern data centers and AI-powered applications.