John Buckingham is a leading, value-oriented money manager and the editor of The Prudent Speculator. Here, he updates two technology stocks that fell after reporting earnings — but where he sees long-term value for patient investors.

Shares of Hewlett Packard Enterprise (HPE) tumbled after the firm released fiscal Q2 financial results that trailed analyst estimates. The enterprise storage and networking concern earned an adjusted $0.19 per share in Q2 (versus $0.45 est.).

Revenue for the company’s largest segment, Compute, was $2.99 billion (+0.4% y/y), while Intelligent Edge posted 8% y/y growth to $867 million and HPC & AI grew 3.8% y/y to $710 million. The 34.2% gross margin was in line with the consensus estimate.

HPE reaffirmed its full-year revenue growth between 3% and 4% with free cash flow in the $1.8 billion to $2.0 billion range. The company suspended shipments and sales to Russia and Belarus, which represents less than 2% of fiscal 2021 revenue figure. While still in the early innings of HPE’s transformation, we appreciate the progress and the direction the firm is headed.

Even though shares are down this year, HPE’s return is about 15% ahead of the S&P 500 Information Technology sector index. Currency headwinds and accounting rules always play a part in the recognition of global revenue, so it’s fully possible that the current FX headwinds turn into tailwinds with little advance notice.

We think the valuation is very reasonable (7 times forward earnings, for example) and the 3.2% yield is ripe for a bump up. Our Target Price has been trimmed to $21.

Shares of Intel (INTC) sank after CFO Dave Zisner’s comments at the Bank of America Securities 2022 Global Technology Conference added to investor worries. The sour mood seemed to catch some analysts by surprise, which we find surprising given INTC’s recent comments have indicated the company is definitely not out of the restructuring woods.

We have not been shy to bemoan Intel’s manufacturing difficulties in recent years, while CEO Pat Gelsinger’s turnaround plans to have yet to gain steam. Chip making is capital-intensive and it takes time for the first chips to roll off the production line.

We think it’s worth cutting INTC management a little more slack to get the house in order. Intel’s business risk is certainly above-average for our portfolios, but we think its return profile more than compensates for that above-average risk. We continue to like the valuation (11.5 times forward earnings and 3.7% dividend yield), the direction and potential. Our Target Price is now $64.

Subscribe to The Prudent Speculator here…