By Nate Wolf
Hewlett Packard Enterprise stock surged Thursday, getting a bump from a price-target hike at Citi and stellar earnings from networking competitor Cisco Systems.
The company's exposure to both networking and servers -- two persistent themes in the artificial-intelligence trade -- make it a winner, Citi said in a research note Thursday. The firm reiterated a Buy rating on HPE stock and lifted its price target to $39 from $27.
HPE stock jumped 5.7% to $33.90 after the open. Heading into Thursday, shares have climbed 34% this year and 82% over the last 12 months after the company beat analysts' estimates and raised guidance in its last earnings report.
On Thursday, Cisco's earnings report was the big story. The networking stalwart reported $5.3 billion in AI infrastructure orders so far in fiscal 2026 -- already above its previous $5 billion target for the year. The report followed similar outperformance from Arista Networks last week.
The results bode well for HPE's AI, campus, and enterprise networking businesses, Citi said.
"Networking remains the clearest near-term driver into the coming quarter, as we await to hear how the expanded portfolio is performing," wrote analyst Asiya Merchant, adding that data-center buildouts "are increasing the need for high-speed, programmable, low-latency connectivity."
On the AI server side, Citi was encouraged by comments from cloud infrastructure company CoreWeave and server maker Super Micro Computer, which signaled accelerating AI adoption across enterprises, sovereign clouds, and neoclouds.
These trends should support demand for HPE's AI servers and systems, offsetting higher component costs in its traditional server business, Citi says. The firm lifted its fiscal 2026 earnings estimate for HPE to $2.45 a share from $2.40 and assigned the stock a higher price multiple.
Surging AI server demand is also a positive sign for Dell Technologies, one of Super Micro's fiercest competitors in the space. Super Micro "highlighted strong demand across neocloud and sovereigns alongside improving enterprise mix," Merchant said. The commentary reinforced Citi's "view that AI infrastructure deployments remain durable and continue to broaden beyond hyperscalers, a positive for profitability."
At the same time, Dell's traditional server business should benefit from data-center modernization and refreshes. Core server demand hasn't faltered despite price increases, Citi noted.
The firm reiterated a Buy rating on Dell stock and lifted its price target to $290 from $235 in Thursday's research note, reflecting both a higher multiple and stronger fiscal-year estimates.
Shares were up 1.4% to $247.32, having climbed 94% this year. Dell was a Barron's stock pick in October.
Write to Nate Wolf at nate.wolf@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 14, 2026 10:10 ET (14:10 GMT)
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