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Hewlett Packard Enterprise ( HPE ) shares popped after the company’s better-than-expected fiscal fourth-quarter results drew price target bumps from analysts.

Stifel reiterated its buy rating for the server maker and upgraded its price target to $25 from $22, calling the company’s shares “undervalued” amid “strong demand for [ artificial intelligence (AI) ] servers and signs of a recovery in traditional servers.”

Morgan Stanley upgraded HP Enterprise to “overweight” from “equal weight” and raised its price target to $28 from $23. The firm noted that HP Enterprise outperformed its results from last quarter "driven by AI servers." AI server revenue was in line with expectations at $1.5 billion.

In its fiscal fourth quarter, HP Enterprise posted record revenue of $8.5 billion, up 15% year-over-year and above the analyst consensus compiled by Visible Alpha. Net income was $1.34 billion, or 99 cents per share, up from $642 million, or 49 cents per share, a year earlier.

HP Enterprise server revenue jumped 32% to $4.7 billion, above analysts' estimates. In October, the company unveiled new servers powered by Advanced Micro Devices ( AMD ) chips and designed to support AI clusters for tasks like training large language models.

Shares of HP Enterprise rose more than 10% to $24.01 intraday Friday and have gained more than 40% in 2024.

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