Analysts at UBS have repeated their ‘Neutral’ rating for Hewlett Packard Enterprise (HPE) after the company announced its entrance to the public AI cloud market through a new partnership with German start-up Aleph Alpha.
They also repeated their 12-month price target of $15, which is below the stock’s current price of $16.88.
HPE, an enterprise-focused IT company created in 2015 when HP split its operations into two businesses, on Tuesday announced GreenLake for Large Language Models (LLMs), a multi-tenant cloud service for enterprises to train, tune, and deploy LLMs, among other corporate updates.
In a note to clients, the analysts pointed out that HPE’s disclosed AI pipeline has now been upsized to $3 billion, a significant lift from the $800 million expected just last quarter.
“HPE's supercomputing capabilities along with expanded cloud AI services has resulted in solid AI wins recently (customers developing, training, and running AI models) lifting HPE's 'AI pipeline' to $3B, up from $800M last quarter,” they wrote.
“Longer-term, the company provided an 'AI' total addressable market of $138 billion in FY26, up from $59 billion in FY22 supported by future exascale systems, AI infrastructure (~24%) and AI platform (30%) growth supported by the software capabilities from the Pachyderm acquisition completed in January 2023.”
They also noted HPE’s announcement of expanded offerings including “Networking-as-a-Service" (NaaS), which they believe has the potential to be an incremental driver of intelligence edge growth over the long term.
However, they noted: “We caution that the NaaS market is increasingly crowded with legacy players like Cisco and new entrants like Nile Networks (led by former Cisco CEO John Chambers) offering competitive services but ultimately expect enterprises to adopt this service.”
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