HPE Earnings: In-Line Quarter and Reaffirmed Fiscal 2024 Guide Lead Us to Maintain $16 Fair Value

We maintain our $16 fair value estimate for shares of no-moat Hewlett Packard Enterprise after its fiscal fourth-quarter results met our expectations. HPE is guiding for more tepid performance in the January quarter, but for a strong ramp of artificial intelligence, or AI, sales throughout the fiscal year. Overall, we see varying demand across the firm’s end markets. Servers and storage continue to see softer spending from customers digesting orders they already have on hand. Networking has done tremendously well over the past five quarters, but looks like it may be coming up on a demand hangover, similar to peers. Supercomputing and AI server sales look ready for an extended period of strong demand. Still, we view growth guidance for fiscal 2024 as positive in light of the mixed demand backdrop. We see shares as fairly valued.