HPE Surges 26% in 3 Months: Is it the Right Time to Buy the Stock?

HPE has gained 25.9% over the past three months, outpacing its industry peers on surging artificial intelligence infrastructure demand. The company reported $2.4 billion in AI Systems orders and a record $7.6 billion total AI backlog in its fiscal Q3 2026 results.

Cloud & AI revenues climbed 25% year-over-year, while server revenues jumped 35%. Gross margin expanded to 40.4%, and operating profit surged 155%. The AI infrastructure buildout is driving both top-line growth and margin expansion across HPE's data center portfolio.

Despite the rally, HPE trades at a forward price-to-sales ratio of 1.5, significantly below the industry average of 4.81. That valuation gap has prompted analysts at Zacks Investment Research to recommend accumulation, viewing the stock as undervalued relative to peers including AMD, INTC, and NVDA, which command higher multiples in the AI hardware space.

The discount reflects HPE's traditional enterprise IT legacy, but the $7.6 billion AI backlog signals a structural shift in the business mix toward higher-margin, high-growth AI infrastructure.