HPE lifts annual forecast on AI and networking-driven revenue growth

• HPE increased fiscal 2026 revenue growth forecast to 34%-37% (from 29%-33%) and fiscal 2027 outlook to 13%-17% growth (from 8%-12%), with adjusted EPS projections also raised
• Third-quarter revenue grew 33.6% to $12.21 billion, beating estimates of $11.91 billion, with earnings of $1.11 per share
• CFO cited supply constraints with memory as the main bottleneck, noting 'demand is far outstripping supply' despite longer-term supply agreements for critical components

Summary

Hewlett Packard Enterprise (HPE) raised its annual revenue and earnings forecasts on September 2nd after third-quarter results exceeded Wall Street expectations, driven by surging AI-related demand for servers and networking equipment.

Key Financial Data:

• Q3 revenue: $12.21 billion (up 33.6% YoY vs. estimates of $11.91 billion)
• Q3 adjusted EPS: $1.11, beating expectations
• FY2026 revenue growth outlook raised to 34%-37% (from 29%-33%)
• FY2026 adjusted EPS forecast: $3.75-$3.85
• FY2027 revenue growth projection increased to 13%-17% (from 8%-12%)
• FY2027 adjusted EPS growth: 16%-20% (from 12%-16%)

Market Drivers:

HPE's high-powered servers, essential for building and training AI models, are experiencing strong demand from cloud computing providers and large enterprises. CFO Marie Myers indicated that enterprise AI adoption is accelerating, with customers moving from testing phases in fiscal 2025-2026 to deployments showing productivity gains.

Strategic Developments:

HPE announced an expanded collaboration with Oracle to deploy HPE Juniper Networking equipment across Oracle's AI data centers, scaling global AI infrastructure.

Supply Constraints:

Despite strong demand, supply remains constrained with memory as the primary bottleneck, followed by NAND, CPUs, and drives. Myers noted "demand is far outstripping supply," though HPE has secured longer-term supply agreements.

Market Context:

HPE's results align with broader trends as Big Tech's AI spending is projected to exceed $730 billion this year. The company benefits from strengthening enterprise IT infrastructure spending driven by AI investment, server refresh cycles, and rising data center capacity demand.