HPE shares soar 30% as demand for AI infrastructure powers stellar quarter

Specialist Meric Greenbaum works on the floor of the New York Stock Exchange, Wednesday, April 22, 2026. (AP Photo/Richard Drew)

June 2 (Reuters) - Hewlett Packard Enterprise shares surged 30 per cent on Tuesday after a rosy quarter that put it on track to hit long-term financial targets two years ahead of schedule, the latest evidence of strong demand for its AI servers used in data centers.

The premarket gains, if sustained, would add over US$14 billion to the company’s market value of US$62.36 billion. They follow strong forecasts from rivals Dell and Super Micro Computer as Big Tech presses ahead with around US$700 billion in AI spending this year.

The insatiable demand from the AI industry has allowed server makers to pass on higher costs for supply-constrained memory chips to customers, shielding their margins. The firms said strong supplier ties are also helping them navigate the shortage.

“The year of refresh” for enterprise IT equipment, AI modernization and product updates is also benefiting the companies, Piper Sandler analysts said in a client note.

“While HPE is seeing this tidal wave, we prefer to be in ‘other boats’ given exposures,” Piper Sandler said. Dell shares were up 2.5 per cent before the bell, while those of Super Micro rose 4.7 per cent.

At least 12 brokerages raised their price targets on HPE’s stock, giving it a median price target of US$65, according to data compiled by LSEG. That is up from US$26.50 before the report.

“The biggest takeaway from the quarter was that HPE is benefiting from the same pricing dynamic that has recently driven upside at Dell - customers are absorbing materially higher server prices with little evidence of demand destruction,” Morgan Stanley analysts said.

HPE has a 12-month forward price-to-earnings ratio of 15.66, compared with Dell’s 23.92 and Super Micro’s 14.49. Shares of HPE have nearly doubled this year.

(Reporting by Jaspreet Singh and Kanishka Ajmera in Bengaluru; Editing by Mrigank Dhaniwala and Sahal Muhammed)