The stock price of enterprise technology company Hewlett-Packard Enterprise ( Hewlett Packard Enterprise, HPE ) rose by nearly 4% at the time of writing this article. Previously, the company announced that it had reached a $1.2 billion AI system deal with cloud service provider Vultr and also raised its long-term growth prospects for its networking business.

This agreement with Vultr is the first major order that HPE has secured after building its system based on AMD Helios AI Rack. At the same time, HPE now expects that the growth rate of its Networking business in the fiscal year 2027 will be faster than previously anticipated, and indicates that its acquisition of Juniper Networks will result in greater cost savings than previously estimated.

According to the agreement, the system of HPE will be deployed in the facilities of Vultr in the United States. Each rack will be equipped with 72 Instinct MI455X GPU chips from chip manufacturer Advanced Micro Devices ( AMD ), and it will also incorporate network technology from HPE for connecting the entire system.

The reason this is important is that AI company requires a large amount of computing power, and the network connection speed between chips is also becoming increasingly critical. As demand increases, HPE expects its Networking business to benefit from it. For the fiscal year 2027, the company now expects Networking revenue to grow at a rate ranging from high single digits to 20%.

The AI infrastructure network business of HPE is expected to grow more rapidly by the fiscal year 2029, with an annual growth rate anticipated to be in the range of 50% to 150%. During the same period, routing business revenue is expected to grow at an annual growth rate of 20% to 30%.

HPE Increases the cost-saving target of Juniper

HPE also expects that the savings resulting from its Juniper acquisition will exceed initial projections. The company now estimates that by the end of the 2028 fiscal year, annual operating cost savings will be at least $800 million, which represents a 33% increase from the previous target of at least $600 million.

These savings may help HPE maintain its operating profit margin in the mid-to-high 20% range for Networking from the 2027 fiscal year to the 2029 fiscal year. At the same time, HPE expects that demand for AI will continue to support the growth of its network business.

HPE Is it worth buying stocks?

Returning to Wall Street, analysts have given a consensus rating of "moderate buy" for the HPE stock. Over the past three months, there have been 10 buy ratings, 7 hold ratings, and 0 sell ratings. The average target price for HPE shown in the chart below is $70.13 per share, which indicates that there is still 9.8% room for price increase. (See HPE stock price forecast)

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