HPE Stock Price Tests Resistance Ahead of Earnings: A Year Of Two Halves

Hewlett Packard Enterprise's stock price (NYSE:HPE) is moving bullishly into this afternoon's earnings, up 13.29% on the month leading into the print, and having rallied more than 80% from April's low.

The street is looking for HPE to come in with earnings per share of $0.41, on revenue of $8.77 billion. This optimistic forecast hinges on HPE's ability to capitalize on key growth areas, especially AI and hybrid cloud solutions.

The company's recent acquisition of Juniper Networks for $14 billion, completed in July, is expected to bolster its networking business and edge-to-cloud strategy. However, integrating Juniper and realizing the anticipated synergies will be a key focus for the markets.

The stock's performance this year has been a rollercoaster, reflecting both the challenges and opportunities facing the tech giant. While HPE is up 5.71% year-to-date, this masks a more volatile reality. The stock plunged roughly 40% into April, reaching a low point before staging an impressive rally of approximately 80% since then.

This surge was fueled, in part, by activist investor Elliott Management taking a $1.5 billion stake in May, and later strong Q2 earnings driven by AI demand. The question now is whether HPE can sustain this momentum.

Recent strategic moves, such as expanding its alliance with Kyndryl to accelerate customer adoption of AI private cloud solutions, could further contribute to revenue growth. Kyndryl's use of HPE's observability, automation, and unified control plane solutions promises to enhance the deployment and management of customer AI workloads.

Several recent events have significantly impacted HPE's financial performance and stock valuation. Back in March, the company reported fiscal first-quarter revenue of $7.85 billion, slightly beating analyst expectations.

Additionally, HPE announced a cost-cutting initiative involving the reduction of approximately 2,500 employees, representing about 5% of its workforce, aiming to achieve $350 million in gross savings by the 2027 fiscal year.

Leading in to earnings, the $23 resistance level has been a key area to watch; a break above this level could signal further upside potential, while a failure to break through could lead to a period of consolidation or even a pullback.