Hewlett Packard Enterprise: The Underdog Cozying Up With Nvidia -- Initiating At Buy

Summary

• Hewlett Packard Enterprise Company is part of the AI server crew but is more of an underdog among the bunch and that's why we think investors should take a closer look.
• This morning, news broke of HPE and Nvidia partnering up with Germany’s Leibniz Supercomputing Centre to make a new supercomputer called “Blue Lion” that'll run on Rubin.
• HPE is catching up to Dell, who is edging ahead in AI server sales at $1.8B for the quarter, versus HPE just now hitting $1B.
• HPE stock is also a value pick; in spite of its AI exposure, this stock is not trading at premium multiples, instead, it's trading below the peer group average.
• HPE has its work cut out and is likely to continue to see margin contraction as AI-server sales become a bigger part of the sales mix, but we think it has more upside potential from here.
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Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.