3 Reasons Hewlett Packard Stock Is a Buy

In the artificial intelligence (AI) arms race, one player that often gets overlooked is software and networking specialist Hewlett Packard Enterprise (NYSE:HPE). This company must not be confused with the computer manufacturer HP Inc. (NYSE:HPQ); Hewlett Packard Enterprise has never been branded as a desktop and laptop maker for “boomers.”

Along with its connection to AI technology, there are multiple features of Hewlett Packard Enterprise that should entice investors. The company, it seems, has also enticed a financier with deep pockets — and that’s one of three main reasons to consider grabbing a few shares of HPE stock.

An AI-Focused Revenue Generator

To prove that Hewlett Packard Enterprise is, indeed, an AI-forward tech firm, the company recently announced tie-ins with the one and only NVIDIA (NASDAQ:NVDA). That’s highly significant since NVIDIA is often considered a dominator in the field of AI-compatible hardware.

First of all, Hewlett Packard Enterprise unveiled a unified data layer that “brings together both structured and unstructured data, speeding up the AI data lifecycle.” When businesses deploy this with NVIDIA’s AI Data Platform, they will be “able to feed their AI applications, models and agents intelligently with AI-ready data.”

Second, the two companies introduced NVIDIA AI Computing by HPE. This co-developed product offers AI solutions for businesses with “enhanced performance, power efficiency, security, and new capabilities for a full-stack, turnkey private cloud for AI.”

Thus, Hewlett Packard Enterprise is deeply immersed in the leading edge of AI technology. Moreover, the company is an undeniable revenue generator. Without a doubt, offering AI-enabled products has helped attract clients and revenue for Hewlett Packard Enterprise.

To quantify this, we can observe that Hewlett Packard Enterprise grew its revenue 16% year over year to $7.9 billion in fiscal 2025’s first quarter. AI-influenced business segments certainly contributed to this result, with HPE’s Server revenue increasing 29% to $4.3 billion and the company’s Hybrid Cloud revenue rising 10% to $1.4 billion.

Also, Q1 of FY2025 wasn’t just a lucky fluke for Hewlett Packard Enterprise as a revenue grower. As Hewlett Packard Enterprise CEO Antonio Neri pointed out, “HPE achieved our fourth consecutive quarter of year-over-year revenue growth, increasing revenue by double digits in Q1.”

Combining Value and Yield

The second main reason to consider owning HPE stock involves a double-shot of good value and decent yield. So, value seekers and income investors should definitely pay attention.

As you can see, Hewlett Packard Enterprise stock is up by more than 50% over the past five years. Yet, even after the long-term share-price rally, HPE shares don’t appear to be overvalued at all.

To back this claim up, I’ll cite a classic valuation metric. Hewlett Packard Enterprise’s trailing 12-month price-to-earnings (P/E) ratio of 7.22x is quite low, especially for a technology firm in the 2020s.

Not only that, but Hewlett Packard Enterprise is eager to take some of its aforementioned revenue and distribute it to the shareholders. Currently, the company offers a forward annual dividend yield of 3.64%.

You won’t get a dividend yield like that from NVIDIA or from the majority of medium-to-large-cap tech companies. Hence, for a powerful value-plus-yield combo that you probably never considered before, feel free to conduct your due diligence on Hewlett Packard Enterprise.

An Activist Investor Takes an Interest

HPE stock jumped today on the heels of a breaking news report from Bloomberg. Apparently, Elliott Investment Management has “built a large position” exceeding $1.5 billion in Hewlett Packard Enterprise.

That’s a vote of confidence, to say the least. Bloomberg didn’t provide specific details on why Elliott Investment Management took such a large stake in Hewlett Packard Enterprise, but it did mention that Elliott “has a successful track record in the technology space.”

Even beyond Elliott Investment Management’s noteworthy share position in Hewlett Packard Enterprise, there’s also the potential for positive reform. After all, the role of an activist investor is to facilitate changes in a company that can benefit the stakeholders.

What changes could Elliott push for with Hewlett Packard Enterprise in 2025? Could the activist investor firm help HPE navigate this year’s U.S.-China trade war? Will there be board member changes or even a CEO switch-up?

Let’s not get ahead of ourselves. With Hewlett Packard Enterprise growing its revenue for multiple consecutive quarters, there’s no need for a “heads will roll” scenario in the executive suite.

Instead, just consider the possibility that Elliott Investment Management might use its influence as a major shareholder to boost Hewlett Packard Enterprise’s top and bottom lines. That’s an exciting prospect, and it’s the third major reason to weigh a long-term investment of your own in HPE stock.

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