HPE stock gains 22.3% on AI demand, $1.2 billion Vultr order

HPE's September rally began with its fiscal third-quarter earnings report on Sept. 2, when revenue rose 34% year over year to $12.2 billion and the company raised guidance for both fiscal 2026 and fiscal 2027. The quarter also included AI systems orders of $2.4 billion, a record AI systems backlog, and networking orders that rose 36%, plus an expanded deal to supply routers and switches for a gigawatt-scale Oracle AI cloud build-out and a multibillion-dollar AI inferencing server contract with an unnamed hyperscaler.

The mid-month period was less smooth. Shares gave back most of their early gains between Sept. 11 and Sept. 14, when AI stocks broadly took a breather, and CEO Antonio Neri sold 250,000 shares, worth roughly $15 million, on Sept. 11. The stock recovered over the rest of the month. On Sept. 30, HPE announced the $1.2 billion Vultr order for AMD Helios AI racks, the first order for that system.

The valuation picture is the puzzle. Even after nearly tripling in 2026, up 188.6% year to date as of Oct. 2, HPE trades at about 14.8 times forward earnings estimates, which is not bubble-level for a company guiding toward fiscal 2027 free cash flow of at least $5 billion. The open question is whether record margins can hold as lower-margin AI systems take up more of the sales mix and the memory shortage persists, which makes the fiscal fourth-quarter report covering the period ending Oct. 31 the next real test of whether AI orders keep turning into shipments.