Hewlett Packard Enterprise (HPE) shares fell nearly 11% on September 14, closing at $55.41, after Evercore ISI withdrew its bullish rating on the stock. Analyst Amit Daryanani downgraded HPE from “Outperform” to “In Line,” a Wall Street expression often interpreted as meaning that much of the stock’s easy upside has already been captured.

The downgrade came after HPE had emerged as one of the year’s strongest performers. The stock had gained roughly 159% year to date through September 11, supported by strong demand for AI-optimized servers and the company’s successful acquisition of Juniper Networks. The one-day decline erased $6.68 per share.

Evercore points to valuation rather than business weakness

Daryanani left Evercore’s $65 price target unchanged, indicating that the firm’s concern centers on valuation rather than a deterioration in HPE’s operations. Before the decline, HPE traded at roughly 13 times fiscal 2027 earnings, compared with a five-year average multiple of about eight times. That represented a premium of approximately 60% to its historical valuation, even as the company benefited from the broader AI infrastructure cycle.

HPE’s latest quarterly performance was strong. Revenue for the July quarter reached $12.21 billion, a 33.7% increase from the same period a year earlier, and management raised its full-year guidance.

However, with fewer clear near-term catalysts, Evercore determined that the balance between potential returns and risks no longer supported its bullish rating. That leaves the stock’s valuation premium tied to continued evidence that AI-related demand and the company’s raised guidance can be sustained.

Broader AI hardware weakness weighs on shares

HPE’s decline occurred alongside a broader sell-off in AI hardware stocks. Intel, AMD, and Marvell also faced selling pressure during the session.

Two industry developments contributed to the shift in market conditions. Anthropic CEO Dario Amodei made comments suggesting that the pace of AI model development could slow. Separately, OpenAI confirmed that it would not conduct an initial public offering in 2026.

Juniper acquisition remains a supporting factor

HPE’s acquisition of Juniper Networks expanded its networking operations and complements the company’s server and storage businesses. Enterprise customers increasingly seek compute and networking products from a single vendor, giving HPE the ability to offer a broader technology stack.

Revenue growth of nearly 34% marks a significant change for a company that spent years as a slower-growth hardware provider. The higher full-year guidance also indicates that management expects demand to continue through the remainder of the fiscal year. Investors will therefore be watching both the continuation of that demand and how the Juniper combination contributes to HPE’s broader offering.

At $55.41, HPE shares were about 15% below Evercore’s unchanged $65 price target.

Source: CryptoBriefing