Hewlett Packard Enterprise’s HPE Private Cloud AI business continues to gain traction as enterprises increasingly look to deploy AI workloads in their own IT environments. Rather than relying entirely on public cloud infrastructure, businesses are adopting private AI systems to gain greater control over data, security, performance and costs. HPE’s latest results suggest this shift is translating into sustained demand for its Private Cloud AI offerings.
Private Cloud AI orders have grown steadily over the past few quarters, supported by an increasing number of customer wins. The momentum was reinforced by broader strength across HPE’s Cloud & AI segment, where revenues grew strongly year over year, and orders continued to outpace revenues. This indicates that demand for AI infrastructure remains healthy and could support future revenue growth as existing orders convert to deployments.
HPE’s AI Systems backlog also provides visibility into the company’s future growth. The strong level of committed demand, combined with continued new orders, suggests that enterprises are progressing from AI experimentation toward larger-scale deployments. Increasing investments in compute infrastructure and unstructured data storage alongside Private Cloud AI further highlight the broader infrastructure requirements associated with enterprise AI adoption.
The expanding GreenLake ecosystem adds another potential growth avenue. With millions of systems already managed through the platform and a large enterprise customer base, HPE has an established channel to introduce Private Cloud AI and related infrastructure solutions. As customers modernize their IT environments, HPE can increasingly cross-sell AI capabilities into its existing installed base.
Overall, continued growth in customer wins, AI infrastructure demand and orders indicates a solid trajectory for HPE’s Private Cloud AI business. If enterprises maintain their preference for secure, controlled and scalable AI environments, Private Cloud AI could remain an increasingly important growth driver for HPE in the coming quarters.
How Competitors Fare Against HPE
Hewlett Packard Enterprise’s closest competitors in this domain are Dell Technologies DELL and Cisco CSCO. Dell AI Factory combined with NVIDIA is arguably the most direct alternative for HPE private cloud AI.
Dell provides pre-integrated GPU servers, storage, networking and software for enterprise AI and competes head-to-head with HPE for Fortune 1000 AI deployments. Cisco focuses on AI networking and integrated AI Pods. Cisco has started competing strongly with HPE after acquiring Splunk and through its partnership with NVIDIA.
HPE’s Price Performance, Valuation and Estimates
HPE has gained 122.5% in the year-to-date period, outperforming the Zacks Computer - Integrated Systems industry’s appreciation of 102.4%.
HPE YTD Performance Chart
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From a valuation standpoint, HPE trades at a forward price-to-sales ratio of 1.42, below the industry’s 5.24. The discounted valuation is also reflected by the Zacks Value Score of B.
HPE Forward 12-Month (P/S) Valuation Chart
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for HPE’s fiscal 2026 margin indicates year-over-year growth rate of 75.8%. Estimates have remained unchanged for the past 60 days.
Image Source: Zacks Investment Research
HPE currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).