Forget Nvidia: Why HPE Could Be the Overlooked AI Infrastructure Play of 2026

By Trey Thoelcke Published Apr 21, 7:20AM EDT

Quick Read

The companies building the infrastructure layer ride the same AI wave as the chipmakers at a fraction of the valuation, and Hewlett Packard Enterprise (HPE) is the most overlooked name in that group.
For retirement-focused investors tired of Nvidia’s premium, HPE offers exposure to AI infrastructure at a valuation with room to move.

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Forget Nvidia: Why HPE Could Be the Overlooked AI Infrastructure Play of 2026 — © Regissercom / Shutterstock.com

Nvidia (NYSE: NVDA | NVDA Price Prediction) dominates the chip layer of the artificial intelligence (AI) buildout with spectacular results. But the infrastructure layer matters: every GPU Nvidia ships comes inside a server chassis, connected by networking fabric, deployed in enterprise data centers. The companies building that infrastructure layer ride the same AI wave at a fraction of the valuation. Hewlett Packard Enterprise (NYSE: HPE) is the most overlooked name in that group, and the numbers prove it.

The Stock Has Already Moved. Most Investors Missed It.

HPE has quietly delivered strong returns while financial media refreshed Nvidia’s chart. The stock closed Monday, April 20, at $27.81, up 15.8% year to date. That performance in a name that most retirement portfolios don’t own signals a contrarian opportunity.

Three Reasons HPE Deserves Attention

1. The Juniper Acquisition Is a Direct AI Networking Play

HPE closed the $13.4 billion Juniper Networks acquisition on July 2, 2025, with results already showing in the financials. The Networking segment posted 151.5% revenue growth year over year in Q1 FY2026, reaching $2.706 billion. Data Center Networking alone grew 382.6% year over year to $444 million. HPE guided full-year Networking segment growth of 68% to 73%. This is an AI infrastructure story, not legacy hardware.

2. Margins Are Expanding While the Competition’s Compress

Compare this to Dell Technologies (NYSE: DELL). Dell’s AI server business is booming, with AI-optimized server revenue up 342% year over year in Q4 FY2026 to $8.95 billion. Yet, volume comes at a cost: GAAP gross margin compressed to 20.2% from 23.7% due to low-margin commodity servers. HPE moves opposite. GAAP gross margin reached 35.9% in Q1 FY2026, up 670 basis points year over year. Higher-margin networking and software revenue reshapes the earnings profile. Management guided non-GAAP operating profit growth of 32% to 40% for the full fiscal year. That is earnings leverage.

3. The Valuation Gap Is Real

HPE carries a forward P/E of approximately 11x and trades at a market cap of roughly $37 billion, against Dell’s $135 billion market cap and forward P/E of 15x. Nvidia’s premium multiple prices in years of dominance. HPE’s multiple prices in almost none of the AI networking upside now flowing through its income statement. The PEG ratio of 0.851 signals that the market has not caught up to the growth trajectory. Free cash flow swung from negative $877 million to positive $708 million in a single quarter, with full-year guidance of at least $2.0 billion. That is a cash flow inflection that the market has not fully priced.

Know the Risks

HPE does face some headwinds. The server segment posted a 2.7% revenue decline in Q1 FY2026. Juniper integration costs compress Networking operating margins even as revenue surges. Goodwill impairment charges totaled over $1.6 billion, hitting the Hybrid Cloud unit in FY2025. AI capex cycles can reverse quickly.

The Bottom Line

Nvidia is the chip. HPE is the network and system that connects and deploys those chips at enterprise scale. CEO Antonio Neri described Q1 as “one of our most profitable quarters on record” with orders rising by double digits across every segment. For retirement-focused investors tired of Nvidia’s premium, HPE offers exposure to AI infrastructure at a valuation with room to move. Investors tracking AI infrastructure exposure may find the valuation gap worth monitoring as the Juniper integration matures.

About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.