Evercore Downgrades HPE to In Line After 159% Rally, Sending Shares Down 9%

Hewlett Packard Enterprise shares fell as much as 9% to around $56.47 on Monday after Evercore ISI downgraded the stock to In Line from Outperform, citing valuation concerns following a sharp and sustained rally. The brokerage kept its $65 price target in place but described a "tougher setup" and a more balanced risk-reward profile after HPE surged 19% in a single week and climbed roughly 159% in 2026.

The downgrade came despite strong underlying fundamentals. HPE recently posted a record quarter with revenue up 34% to $12.2 billion, beat earnings-per-share estimates, and raised its full-year guidance. Management also announced a $3.5 billion AI inferencing deal and an expanded Oracle partnership, moves that have led Wall Street to re-rate the company from a legacy hardware vendor into an AI infrastructure play. HPE's backlog is at record levels, demand is outpacing supply, and the company is guiding for revenue growth above 17% for fiscal 2027.

At 16 times forward free cash flow, the stock's valuation is the core concern for Evercore after the run-up. HPE carries approximately $14 billion in net debt but has committed to returning up to 75% of free cash flow to shareholders. The selling spread to peers: Dell Technologies fell roughly 5% and Super Micro Computer dropped about 8% on the same session.