On April 15, activist investor Elliott Investment Management revealed a bold move: a $1.5 billion stake in Hewlett Packard Enterprise (HPE 📈). With this sizeable investment, Elliott has become one of HPE’s top five shareholders—giving it serious influence as it sets its sights on reviving the tech giant’s sluggish performance.
So far in 2025, HPE’s stock has tumbled 24%, pushing it firmly into deep value territory with a forward P/E ratio of just 8.9x. For a company of HPE’s stature, that kind of discount is hard to ignore—and Elliott clearly isn’t.
For this post we took a deep dive into the stock and Elliott’s move. What makes HPE one of the best cheap stocks to buy? What is Elliott’s angle? What is the potential upside of the trade?
The opportunity
The particularly large stake suggests that activist investor Elliott has identified a significant opportunity to boost HPE’s share price. Since we have no affiliation with Elliott, we give you our very own assessment of the opportunity:
1. Rock-bottom valuation 💵
For a tech stock, it doesn’t get much cheaper than a forward PE ratio of 9x and a Price/Sales ratio of 0.55x.
2. Strong footing 💪
HPE is profitable and on sound financial footing. Operating cashflow was in excess of $4bn in 2024 and its financial health score (50) is in line with the industry average.
3. Invest with the best 🏆
Elliott is one of the most successful investors out there. The hedge fund lost money only twice in its 42 years of operation. While Elliott hasn’t made anything public, analysts are discussing several interesting angles, including a change in governance, redundancies or a second look at the acquisition of Juniper Networks.
4. Positive impact firm ☘️
HPE scores highly for overall social and environmental impact with Ethos ESG scoring the company at 78. HPE outperforms 92% of its industry peers. The company scores particularly high on climate action as well as safe work opportunities.
Hewlett Packard – Business model and prospects
Hewlett Packard Enterprise is a global provider of enterprise IT solutions, focusing on cloud services, networking, and edge computing. Despite its strong brand and broad portfolio, HPE has struggled with slowing growth. However, the company’s recent push into AI infrastructure and hybrid cloud services positions it well for a rebound as enterprise demand evolves.
The company’s revenue is projected to grow at 8% and 6% in 2025 and 2026 respectively.
Why the rock-bottom valuation in spite of topline growth?
Due to its rock-bottom valuation, HPE beats all of its peers on valuation, as reflected by a valuation score of 100. Here’s what we believe has made investors avoid the stock and driven down its valuation.
$HPE
| ’26 Revenue Growth | 6% |
| ’26 Earnings Growth | 15% |
| ’26 P/E Ratio | 7.7x |
- Sluggish Growth: HPE has struggled to generate strong revenue or profit growth in recent years, especially compared to peers focused on high-growth cloud or AI segments. Over time, investors shifted capital to HPE’s faster-growing peers.
- Margin pressure from legacy business: A significant portion of HPE’s revenue still comes from legacy hardware and infrastructure services, which are lower margin and increasingly commoditized.
- Competitive Pressure: The company faces stiff competition from more agile players like Dell, Cisco, and cloud-native companies such as AWS, Azure, and Google Cloud.
- Investor Sentiment: The market tends to discount companies with mixed strategic signals and inconsistent earnings. Even with its pivot toward AI and edge computing, investors seem to be waiting for proof of sustainable transformation.
In short, the low valuation is a mix of structural challenges, strategic skepticism, and cautious investor sentiment. But that also sets the stage for activist opportunity—hence Elliott’s move.
Eliott’s levers to drive shareholder value
Elliott could pursue several strategic angles to unlock shareholder value at HPE.
First, they might push for a leadership change or governance overhaul, potentially replacing CEO Antonio Neri to inject fresh vision and accountability.
Second, they could advocate for a sharper strategic focus—possibly urging HPE to spin off or divest slower-growth segments to double down on high-margin businesses like AI infrastructure and hybrid cloud.
Third, Elliott may scrutinize the Juniper Networks acquisition, pressuring the board to renegotiate, delay, or abandon the deal if it doesn’t clearly add value. Each move would be aimed at improving operational efficiency, market confidence, and ultimately, HPE’s valuation multiple.
Elliott’s track record is outstanding
Elliott Investment Management is one of the most prominent activist hedge funds, known for aggressively pushing for corporate changes to unlock shareholder value. The firm has a long track record of successful campaigns, including high-profile interventions at companies like AT&T, eBay, and Salesforce.
Elliott typically targets underperforming firms, advocating for restructurings, divestitures, leadership changes, or strategic shifts.
Its campaigns have often led to significant stock price increases and delivered a compound annual return of approximately 13% to 14% net of fees since its inception in 1977.
Importantly, Elliott’s track record is even more impressive on a risk-adjusted basis. The company reported only two losing years in 42 years of operating history.
So what is the upside?
We believe Elliott picked a great target for its campaign. By putting $1.5bn to work, Elliott clearly thinks so.
Elliott was able to buy the stock at a very low valuation. And the stock hasn’t really moved that much since.
There are multiple levers for Elliott to drive value.
First, HPE has several opportunities to expand its margins. This could be achieved by cutting costs or by prioritizing its high margin business segments.
Second, though its valuation may not reflect it, HPE has several growth catalysts up its sleeve. HPE is a key player in building high-performance computing systems, including those for AI workloads. With rising demand for AI training infrastructure, this segment has major upside. GreenLake, HPE’s as-a-service platform, is gaining traction by offering cloud-like flexibility on-premises. As more enterprises seek hybrid solutions, this model could drive recurring revenue and higher margins.
Analysts see a 24% upside from the current price level of $16.25. A mere multiple expansion of 1.5 to 11.6x implies a 50% gain from current levels. This looks very much achievable for an investor of Elliott’s caliber, making the stock one of the best cheap stocks to buy now.
What is particularly attractive about this trade is that the downside seems limited in light of HPE’s rock-bottom valuation.
Important Notice
This article is not investment advice.
We believe the information contained in this text to be reliable but do not warrant its accuracy or completeness. Opinions, estimates, and investment strategies and views expressed in this document constitute our judgment based on current market conditions available data and are subject to change without notice. Please consider your full financial situation prior to making an investment decision. The author currently holds shares in HPE.