HPE vs IBM Stock Comparison: AI Score, Valuation, Performance and Upside
HPE and IBM both address enterprise hybrid cloud needs but through different approaches: HPE provides the infrastructure layer (servers, storage, networking, GreenLake as-a-service), while IBM provides the software and consulting layer (Red Hat, watsonx, AI services). They are more complementary than directly competitive, but investors choosing between them are deciding whether to buy the infrastructure or the software/services side of enterprise AI adoption.
HPE vs IBM is a decision between enterprise IT infrastructure and enterprise IT software/services within the hybrid cloud and AI theme — HPE wins if enterprises accelerate on-prem AI server and GreenLake deployments, while IBM wins if watsonx and Red Hat drive software-led recurring revenue with improving margins.
HPE holds the edge across 4 of 5 key metrics in this comparison. HPE leads on both 1-year return (+146.83%) and forward P/E quality (12.81x vs 17.90x for IBM), a relatively favorable combination of momentum and valuation. On fundamentals, HPE is growing revenue faster (40.00%), while IBM maintains the higher operating margin (16.55%) — a classic growth-versus-profitability split. Analyst consensus implies meaningfully more upside for HPE (+24.92%) than for IBM (+3.96%).
Human Wall Street analysts' price targets, typically implying a ~12-month view — a separate signal from this site's own AI Prediction Signal further down the page, which is a 5-/30-day machine-learning forecast based on price history alone.
- prefer infrastructure hardware and as-a-service delivery over software and consulting revenue models
- value HPC exposure via Cray for government and research market differentiation
- want a hybrid cloud infrastructure play that benefits directly from enterprise AI server build-outs
- are comfortable with thinner margins than software companies and execution risk on GreenLake adoption
- prefer a software-heavy recurring revenue model (Red Hat, automation) over hardware-led infrastructure
- value AI consulting and watsonx platform exposure to enterprise AI deployment in regulated industries
- want a high-dividend yield alongside dividend growth from a stable, profitable technology company
- are comfortable with slower organic growth in exchange for margin stability and cash flow predictability
| Metric | HPE | IBM |
|---|---|---|
| AI scorei | 70.8 | 39.3 |
| AI ranki | #38 | #1266 |
| Latest closei | $61.04 | $237.75 |
| 1M returni | +9.61% | +2.18% |
| 6M returni | +175.95% | -5.04% |
| 1Y returni | +146.83% | -8.23% |
How much would $10,000 be worth today if invested at the start of each period, with all dividends reinvested?
| Period | HPE | IBM |
|---|---|---|
| 1Y ago | $24.18K (+141.8%) started 2025-09-18 | $8.97K (-10.3%) started 2025-09-18 |
| 5Y ago | $56.99K (+469.9%) started 2021-09-20 | $25.79K (+157.9%) started 2021-09-20 |
| 10Y ago | $78.98K (+689.8%) started 2016-09-19 | $37.59K (+275.9%) started 2016-09-19 |
Hypothetical — past performance does not guarantee future results.
| Metric | HPE | IBM |
|---|---|---|
| Market capi | $69.27B | $221.96B |
| Trailing P/Ei | 48.89 | 20.92 |
| Forward P/Ei | 12.81 | 17.90 |
| Price/Salesi | N/A | 3.98 |
| EV/Revenuei | 2.20 | 4.04 |
| Analyst targeti | $65.35 | $244.91 |
| Target upsidei | +24.92% | +3.96% |
| Metric | HPE | IBM |
|---|---|---|
| Revenue growthi | 40.00% | 1.10% |
| Earnings growthi | -30.30% | -1.80% |
| EPS growthi | -30.30% | -1.80% |
| FCF margini | +9.89% | +17.44% |
| Operating margini | 8.70% | 16.55% |
| Profit margini | 4.01% | 15.52% |
| ROIC proxyi | 6.31% | 34.46% |
| Return on equityi | 6.31% | 34.46% |
| Dividend yieldi | 1.09% | 2.87% |
| Payout ratioi | 28.74% | 59.77% |
| Dividend growth streaki | No increase yet | No increase yet |
| Betai | 1.44 | 0.70 |
| Debt/equityi | 84.03 | 188.97 |
| Current ratioi | 1.09 | 0.79 |
| Quick ratioi | 0.57 | 0.61 |
Over the past year, HPE and IBM have moved weakly in the same direction (correlation of 0.20), based on daily returns.
Lower drawdown and smaller single-period drops generally indicate a smoother ride, though they do not guarantee lower future risk.
| Period | Metric | HPE | IBM |
|---|---|---|---|
| 1Y | Growthi | +141.84% | -10.28% |
| CAGRi | +142.13% | -10.30% | |
| Volatilityi | 57.06% | 48.85% | |
| Sharpe ratioi | 1.76 | -0.06 | |
| Sortino ratioi | 2.93 | -0.07 | |
| Max drawdowni | 26.57% | 37.50% | |
| Current drawdowni | 1.69% | 27.79% | |
| Avg drawdowni | 10.37% | 15.48% | |
| Ulcer Indexi | 12.40% | 19.25% | |
| Max daily dropi | 10.76% | 25.21% | |
| Max wkly dropi | 17.52% | 30.08% | |
| 5Y | Growthi | +410.62% | +117.05% |
| CAGRi | +38.61% | +16.79% | |
| Volatilityi | 41.53% | 30.37% | |
| Sharpe ratioi | 0.89 | 0.52 | |
| Sortino ratioi | 1.36 | 0.71 | |
| Max drawdowni | 48.36% | 37.50% | |
| Current drawdowni | 1.69% | 27.79% | |
| Avg drawdowni | 11.03% | 8.15% | |
| Ulcer Indexi | 14.06% | 11.29% | |
| Max daily dropi | 15.14% | 25.21% | |
| Max wkly dropi | 20.76% | 30.08% | |
| 10Y | Growthi | +495.10% | +135.76% |
| CAGRi | +19.53% | +8.96% | |
| Volatilityi | 38.35% | 28.24% | |
| Sharpe ratioi | 0.54 | 0.29 | |
| Sortino ratioi | 0.79 | 0.40 | |
| Max drawdowni | 56.87% | 40.59% | |
| Current drawdowni | 1.69% | 27.79% | |
| Avg drawdowni | 14.87% | 11.63% | |
| Ulcer Indexi | 19.19% | 14.33% | |
| Max daily dropi | 15.31% | 25.21% | |
| Max wkly dropi | 28.21% | 30.08% |
| Category | HPE | IBM |
|---|---|---|
| Company | Hewlett Packard Enterprise Company | International Business Machines Corporation |
| Sector | Technology | Technology |
| Industry | Communication Equipment | Information Technology Services |
| Core business | HPE sells enterprise compute, storage, networking, and hybrid cloud infrastructure. Its GreenLake platform delivers on-premises infrastructure as a service, generating growing annual recurring revenue. HPE serves enterprise, government, research, and service provider customers, with specialized strength in HPC via Cray supercomputers. | IBM is a hybrid cloud and AI technology company following the 2021 spin-off of its managed infrastructure services business (now Kyndryl). The remaining IBM consists of software (Red Hat, Automation, Data & AI), consulting (formerly GBS), and infrastructure (mainframes, storage). IBM's AI strategy is centered on watsonx, its enterprise AI platform for building, deploying, and governing large language models in regulated industries such as banking, insurance, and government. |
| Investor focus | Investors track GreenLake ARR growth, AI server and HPC backlog, gross margins under server pricing pressure, and the pace of enterprise adoption of as-a-service infrastructure models. | Investors focus on software segment revenue growth (particularly Red Hat and AI/automation), consulting revenue as enterprise AI adoption drives services demand, free cash flow generation relative to the dividend, and watsonx enterprise adoption rates. |
- GreenLake as-a-service model is creating a recurring revenue base that improves revenue predictability
- Cray HPC business serves strategic government and research customers with high switching costs
- Aruba networking provides a growing enterprise WLAN and campus switching franchise with software attach
- Red Hat OpenShift is the leading enterprise Kubernetes platform, deeply embedded in hybrid cloud deployments across Fortune 500 companies
- Watsonx positions IBM as an enterprise AI governance and deployment platform in regulated industries with data residency and compliance requirements
- Mainframe Z-series creates a captive, high-margin hardware and software revenue stream with near-zero churn from banking and insurance customers
- GreenLake ARR growth has trailed initial targets, raising questions about enterprise willingness to pay for on-prem as-a-service
- AI server margins are thin due to GPU component costs, and HPE has less AI server market share than Dell
- Intense competition across server, storage, and networking from Dell, Cisco, and pure-play cloud providers
- Consulting revenue is sensitive to enterprise IT budget cuts and AI automation reducing the services headcount model
- Watsonx adoption has been slower than IBM initially projected, competing against Azure OpenAI, AWS Bedrock, and Google Vertex AI
- IBM's organic software growth rates are lower than pure-play SaaS companies, limiting multiple expansion potential
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