hewlett packard enterpriseThe HPE Private Cloud AI business continues to gain momentum as enterprises increasingly deploy AI workloads on their own infrastructure rather than relying solely on public cloud environments. The company’s 2Q26 financial results show that demand remains strong, raising the question of whether this adoption trend can continue over the next few quarters.
Private Cloud AI was one of the standout contributors within HPE’s Cloud and AI segment this quarter. Private cloud AI orders increased in the second quarter, supported by a growing base of new customer acquisitions. This performance complemented the overall strength of the division, where sales increased 23% year over year to $7.7 billion and orders continued to outpace sales.
Hewlett Packard Enterprise also reported a record $5.9 billion in backlog for AI systems, including $1.8 billion in new AI systems orders, providing meaningful visibility into future deployments. Reflecting the growing preference of enterprises for secure on-premises AI environments, more customers are adopting private cloud AI alongside investments in computing infrastructure and unstructured data storage.
HPE’s growing GreenLake ecosystem further enhances private cloud AI opportunities. The GreenLake platform currently manages more than 6.7 million systems, up from 5.3 million a year ago, and serves approximately 50,000 customers. This expanded installed base gives HPE a large enterprise user base to cross-sell private cloud AI solutions as customers modernize their IT environments.
Continued growth in customer acquisitions across AI systems backlog, enterprise infrastructure spending, and other services that incorporate private cloud capabilities shows the company remains on a solid trajectory.
How do competitors stack up against HPE?
Hewlett Packard Enterprise’s closest competitors in this space are: Dell Technologieswith del Cisco C.S.C.O. The combination of Dell AI Factory and NVIDIA is perhaps the most direct alternative to HPE Private Cloud AI.
Dell offers pre-integrated GPU servers, storage, networking, and software for enterprise AI, competing directly with HPE in Fortune 1000 AI deployments. Cisco is focused on AI networking and integrated AI pods. Cisco acquired Splunk and began competing strongly with HPE through its partnership with NVIDIA.
HPE price performance, ratings, and quotes
HPE is up 90.8% year-to-date. However, the company’s performance has underperformed the Zacks Computer – Integrated Systems industry, which returned 93.2% in the same period.
HPE YTD Performance Chart
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From a valuation perspective, HPE’s forward price-to-sales ratio of 1.24x is lower than the industry’s 5.3x. The discount rating is also reflected in B’s Zacks Value Score.
HPE Forward 12 Month (P/S) Rating Chart
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The Zacks Consensus Estimate for HPE’s fiscal 2026 earnings reflects year-over-year growth of 75.8%. Estimates have not changed over the past 30 days.
Image source: Zacks Investment Research
HPE currently sports a Zacks Rank #1 (Strong Buy). You can view See the complete list of today’s Zacks #1 Rank stocks here.
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This article originally appeared on Zacks Investment Research (zacks.com).
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