Key Highlights
- Hewlett Packard Enterprise delivered fiscal Q3 adjusted earnings per share of $1.11, crushing analyst expectations of $0.93, while revenue reached $12.2 billionāa 34% jump year-over-year
- The company’s cloud and AI segment generated $9 billion in revenue with 25% growth, and networking sales skyrocketed 75% to $2.9 billion
- Management elevated fiscal 2026 revenue growth projections to 34%-37% from previous estimates of 29%-33%, and boosted fiscal 2027 outlook to 13%-17%
- Shares declined more than 5% in extended trading despite beating expectations, as concerns mounted over shrinking margins and component shortages
- Chief Executive Antonio Neri cautioned that supply availability will face significant constraints extending through 2028, with memory components being the primary challenge
Shares of HPE tumbled over 5% during after-hours trading Wednesday following the enterprise technology giant’s announcement of record-breaking quarterly results. The decline came as a surprise given the stock’s impressive 116% rally year-to-date prior to the earnings release.
Hewlett Packard Enterprise Company, HPE
The company’s adjusted earnings per share reached $1.11, representing a substantial increase from $0.44 in the same period last year and significantly surpassing the Street consensus of $0.93. Total revenue of $12.2 billion marked a 34% year-over-year increase and exceeded Wall Street’s projection of $12 billion.
The cloud and artificial intelligence division generated $9 billion in quarterly revenue, climbing 25% compared to the previous year. Server sales increased 35% to reach $6.8 billion, while networking revenue experienced a dramatic 75% surge to $2.9 billion.
The enterprise tech firm also revealed an expanded partnership with Oracle, which will see HPE Juniper Networking deployed throughout Oracle’s AI-focused data center facilities.
Chief Executive Antonio Neri characterized the performance as “turning exceptional demand into durable, profitable growth.”
However, investors remained cautious despite the positive commentary.
Component Shortages to Persist Until 2028
The enterprise technology provider’s primary challenge centers on securing sufficient components to satisfy customer demand. Chief Financial Officer Marie Myers identified memory as the most significant supply bottleneck, followed by NAND storage, processors, and hard drives.
“Demand is far outstripping supply,” Myers explained to Reuters.
HPE has negotiated extended supply arrangements to secure better access to critical components, though shortages will continue impacting order completion and profitability metrics.
Company leadership projected that operating margins will compress sequentially during the October quarter, attributed to an increased proportion of AI system sales and competitive pricing dynamics.
Neri indicated supply limitations won’t improve “anytime soon” and anticipates these challenges persisting through 2028.
The company’s inventory balance reached $11.82 billion at the close of July, up considerably from $7.16 billion twelve months prior. Myers attributed the increase to elevated commodity pricing and strategic procurement activities designed to fulfill expanding orders and backlog.
Company Elevates Fiscal 2026 and 2027 Projections
HPE increased its fiscal 2026 revenue growth forecast to a range of 34% to 37%, representing an upgrade from the previous guidance of 29% to 33%.
For the upcoming October quarter, management projected revenue between $13.9 billion and $14.8 billion, with the midpoint surpassing the analyst consensus of $13 billion. Adjusted earnings per share guidance of $1.20 to $1.30 also exceeded the $1.07 Street estimate.
The technology company also upgraded its fiscal 2027 revenue growth expectations to 13% to 17%.
HPE finalized its Juniper Networks acquisition in July 2025 to strengthen its networking capabilities, with this division now projected to deliver 73% to 74% growth for the complete fiscal year.
Myers observed that enterprise artificial intelligence implementation is “really starting to settle in,” with management anticipating this momentum will fuel expansion beyond the current fiscal period.
These results mirror optimistic forecasts from Dell Technologies and Super Micro Computer, as technology sector participants collectively prepare to invest over $730 billion in AI infrastructure throughout this year.
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