Hewlett Packard Enterprise shares fall amid AI sector selloff and downgrade

Hewlett Packard Enterprise (HPE) shares fell 9.57% to $56.14 during Monday trading, following an analyst downgrade and a broader market selloff in artificial intelligence-linked stocks. Evercore ISI downgraded the stock from ‘Outperform’ to ‘In Line,’ citing valuation concerns after the stock had gained 158.5% since the start of the year. The decline coincided with a wider industry pullback triggered by discussions regarding AI safety and model development pace.

Despite the stock volatility, HPE leadership expressed optimism regarding long-term demand. Chief Strategy Officer Shannon Cross reported strong growth in networking, storage, and traditional servers, noting that networking revenue increased 10% in the latest quarter while orders rose 36%.

HPE has raised its fiscal 2027 outlook, targeting revenue growth of 13% to 17% and earnings per share growth of 16% to 20%. The company is also increasing its free-cash-flow targets, aiming for at least $3.75 billion in fiscal 2026 and at least $5 billion in fiscal 2027. To support this growth, HPE has significantly increased its purchase commitments for components, rising from $6 billion to $30 billion.