What Happened?
Shares of enterprise technology company Hewlett Packard Enterprise (NYSE: HPE) fell 2.4% in the afternoon session after a key competitor, Dell Technologies, issued a disappointing profit forecast, sparking concerns about profitability across the AI server market.
The negative sentiment followed Dell's report, where despite strong AI server demand, the company's profit forecast and margins disappointed investors. Dell noted that high costs for components and competitive pricing were squeezing its profits. This news has created concerns that other enterprise hardware providers, including Hewlett Packard Enterprise, are likely facing similar challenges with intense competition and margin pressures in the AI server business. The broader tech sector also showed signs of weakness, with chipmaker Marvell Technology also plunging after its revenue projection disappointed investors.
The shares closed the day at $22.58, down 2.4% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Hewlett Packard Enterprise? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Hewlett Packard Enterprise’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 3.6% on the news that the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.
Hewlett Packard Enterprise is up 5.2% since the beginning of the year, and at $22.58 per share, it is trading close to its 52-week high of $24.42 from January 2025. Investors who bought $1,000 worth of Hewlett Packard Enterprise’s shares 5 years ago would now be looking at an investment worth $2,335.
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