HPE stock surges 36% after record quarter, boosts AI outlook

Hewlett Packard Enterprise shares jumped 36% in after-hours trading after the company reported record second-quarter revenue and raised its fiscal 2026 revenue growth outlook tied to AI-related spending.

HPE reported revenue of $10.68 billion for the quarter, a 40% increase from a year earlier and above analysts’ expectations of $9.79 billion. Adjusted earnings were $0.79 per share, compared with forecasts of $0.53. The company raised its fiscal 2026 revenue growth target to 29%–33% from a prior range of 17%–22% and lifted its networking revenue growth outlook to 72%–75% from 68%–73%.

Executives pointed to strong demand for servers used in artificial intelligence workloads. The Cloud & AI business, which includes HPE’s server operations, generated $7.71 billion in revenue, exceeding expectations near $6.93 billion. Company leaders attributed large orders largely to enterprise deployments of AI systems.

CFO Marie Myers highlighted the performance of the traditional server business and a shifting mix of enterprise workloads. “The strength of the quarter was largely driven by the performance of our traditional server business, which is really focused on enterprise customers,” Myers noted. She said the growing adoption of agentic AI, where systems perform tasks with limited human intervention, became a meaningful workload for customers.

Networking revenue rose to $2.69 billion, a 148% increase from a year earlier, reflecting the inclusion of Juniper Networks after HPE’s acquisition closed in July 2025. Company executives attributed the increase to the integration of Juniper’s business and stronger demand for networking gear.

Myers described measures to manage rising memory chip costs, including pricing adjustments and long-term supply agreements that extend into 2027. HPE also signaled confidence in cash generation, saying it expects to return roughly 75% of free cash flow to shareholders in fiscal 2027.

CEO Antonio Neri framed the results as evidence of sustained demand and execution. “Our results are durable,” Neri said. “We are creating significant shareholder value through innovation, and to our investors who came with us along the journey — and in particular through the Juniper acquisition — thank you.”

The upgraded outlook comes as major technology companies increase investment in AI infrastructure. Industry estimates indicate firms such as Alphabet and Amazon plan substantial spending on AI-related servers, networking equipment and data-center hardware this year, creating continued demand for suppliers of those components.