The stock market’s search for new plays on artificial intelligence hardware has led investors to rediscover Hewlett Packard Enterprise.

Back in 2015, when the old Hewlett Packard split into two companies, HP Inc.—the other HP—took the personal-computer and printer business. HP Enterprise, meanwhile, sells an assortment of hardware and software to corporate buyers, including servers and networking gear, as well as supercomputers. In 2019, the company bought Cray, long the global leader in that esoteric field.

But what has given the stock new appeal is its growing backlog of orders for AI servers based on Nvidia graphics processing units. HP Enterprise shares were up nearly 10% on Monday.

HP Enterprise, which in 2022 shifted its headquarters to Houston from Silicon Valley, has been a modest grower at best in recent quarters. Last week, the company reported revenue for its January quarter of $6.8 billion, down 14%. Revenue was below both the range of $6.9 billion to $7.3 billion management had said to expect and the consensus call of $7.1 billion among analysts tracked by FactSet.

The company blamed the shortfall in part on softness in its networking business.

For the October 2024 fiscal year, HP Enterprise sees revenue ranging from flat to up 2%.

HP Enterprise shares have come under pressure this year, at least until the past couple of trading days, from investor skepticism about the company’s pending $14 billion acquisition of Juniper Networks. When that deal was disclosed, HP Enterprise positioned the transaction partly as a bet on the growing need for networking technologies in cloud- computing sites focused on generative AI, but the market initially gave the purchase a big thumbs down.

Although the market’s initial take on HP Enterprise’s latest earnings was unenthusiastic, this year’s surge in shares of Super Micro Computer —combined with enthusiasm about Dell Technologies following its results for the January quarter—has triggered a rethinking. Adding to the case for the shares is that they are among the cheapest of tech stocks on both a price-to-earnings and price-to-sales basis. Even after a recent surge, the stock trades for just nine times estimated earnings for the current year profits, and only 0.7 times estimated sales.

CEO Antonio Neri told Barron’s last week that the company is seeing “significant momentum” in AI-related servers. He said HP Enterprise has had $4 billion in AI-related server orders since the start of fiscal 2023, bringing its backlog to $3 billion, up $500 million in the latest quarter. He said that 25% of the company’s server revenue is now tied to AI.

Neri added that revenue in the latest quarter could have been higher if it had more GPUs. Neri said the company expects “an acceleration” in conversions of backlogged orders to sales, with higher revenue, in the second half of the company’s October 2024 fiscal year.