Hewlett Packard stock is sharply lower as AI margins suffer
Hewlett Packard Enterprise Co (NYSE:HPE) stock is 7.3% lower to trade at $17.51 this morning, on track for its worst single-session decline since January. The tech stock is deep in the red even after reporting fiscal third-quarter earnings of 50 cents per share on $7.71 billion in revenue, both of which topped estimates.
Instead, HPE is lower because artificial intelligence (AI) gross margins declined year-over-year, even though AI server revenue hit a new record. In response, BofA Global Research chimed in with a price-target cut to $21 from $24.
With today’s drawdown, HPE is nearing its year-to-date breakeven. Shares have taken a 23% haircut since a June 18, record peak of $22.81. If there’s a silver lining, it’s that this pullback appears to have been contained by the $16.50 level, which stopped the early August broad market tech correction as well.
At last check, 14,000 calls and 12,000 puts have exchanged hands, which is six times the intraday average volume. The weekly 9/6 17.50-strike put leading the charge. Put spread activity is also detected at the September 17.50 strike.