Shares of Hewlett Packard Enterprise (HPE -1.40%) rose 22.3% in September 2026, according to data from S&P Global Market Intelligence. It started with a blowout earnings report on Sept. 2. On the tail end, HPE recorded a $1.2 billion order for a new AI server rack. Both stories point to the same theme: HPE has become a serious supplier to the AI data center boom.
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AI data center orders powered HPE's rally
HPE's fiscal third-quarter revenue rose 34% year over year to $12.2 billion, topping the $11.93 billion consensus estimate. Earnings of $1.11 per share cleared the consensus by $0.19, and the company raised guidance for both fiscal 2026 and fiscal 2027. The fourth-quarter revenue forecast of $13.9 billion to $14.8 billion was comfortably ahead of the $13.0 billion analysts expected at the time.
AI demand drove the beat. AI systems orders jumped more than 30% from the previous quarter to $2.4 billion, and the AI systems backlog reached a record high. Networking orders rose 36%, including a record $700 million of AI networking orders. HPE also announced an expanded deal to supply routers and switches for a gigawatt-scale Oracle (ORCL +0.13%) AI cloud build-out, plus a multibillion-dollar AI inferencing server contract with an unnamed hyperscaler. I'm still just talking about Sept. 2.
The mid-month ride wasn't smooth. Shares gave back most of their early gains between Sept. 11 and Sept. 14, when AI stocks broadly took a breather. CEO Antonio Neri also sold 250,000 shares, worth roughly $15 million, on Sept. 11. The stock recovered over the rest of the month, but HPE's chart made a decent impression of a saw blade in close-up.
But all's well that ends well. On Sept. 30, HPE announced a $1.2 billion order from cloud provider Vultr for AMD Helios AI racks built by HPE. It's the first order for the system, which pairs Advanced Micro Devices (AMD -0.34%) graphics processors with HPE networking gear. When HPE issued its fiscal 2027 framework on Sept. 2, it excluded Helios entirely, so the order represents potential upside. In fact, management raised its networking revenue guidance that day, alongside stronger synergies from the $14 billion Juniper buyout.
NYSE: HPE
Key Data Points
What HPE investors should watch next
Here's the surprising part. 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. That's not a bubble-level price for a company guiding toward fiscal 2027 free cash flow of at least $5 billion.
The catch is that HPE's record margins probably won't last. Management expects gross margins to drift back toward historical levels as lower-margin AI systems take up more of the sales mix, and the memory shortage isn't going away soon.
Still, HPE keeps adding reasons to watch. The fiscal fourth-quarter report, covering the period ending Oct. 31, will show whether HPE can continue converting AI orders into shipments.
