HPE stock soars 36% as AI server boom fuels record quarter, outlook raised

Hewlett Packard Enterprise shares surged more than 36% in after-hours trading after the company reported record second-quarter results and raised its growth outlook, underscoring the strength of enterprise spending on artificial intelligence infrastructure.

The rally puts the stock on track for its largest single-day gain on record if the after-hours advance carries into Tuesday's trading session.

The company reported revenue of $10.68 billion for the quarter, up 40% from a year earlier and well ahead of analysts’ expectations of $9.79 billion, according to LSEG data.

Adjusted earnings came in at 79 cents per share, comfortably surpassing estimates of 53 cents.

The company upgraded its financial outlook, reflecting confidence that AI-driven spending will remain robust.

HPE now expects fiscal 2026 revenue growth of between 29% and 33%, compared with its previous forecast of 17% to 22%.

The company also raised its networking revenue growth outlook to between 72% and 75%, up from its earlier projection of 68% to 73%.

Enterprise AI adoption drives growth

HPE executives said the quarter was powered by strong demand across its core server business, particularly from enterprise customers deploying AI-related workloads.

“The strength of the quarter was largely driven by the performance of our traditional server business, which is really focused on enterprise customers,” Chief Financial Officer Marie Myers told Reuters.

She said a key shift during the quarter was the growing adoption of agentic AI, where AI systems can perform tasks with limited human intervention, becoming a meaningful workload for enterprise customers.

Cloud & AI revenue, the segment that includes HPE’s server business, reached $7.71 billion, comfortably ahead of Wall Street expectations of $6.93 billion.

The stronger outlook also comes as major technology companies continue to ramp up investment in AI infrastructure.

Alphabet and Amazon are expected to spend more than $700 billion collectively on AI-related infrastructure this year, creating significant opportunities for suppliers of servers, networking equipment and data-center hardware.

Myers said HPE has been managing rising memory chip costs through a combination of pricing measures and long-term agreements that extend into 2027.

The results come just days after Dell Technologies also reported stronger-than-expected earnings and lifted its annual outlook, highlighting sustained demand for AI servers and related infrastructure.

Juniper acquisition adds momentum

Networking remained another major contributor to growth following HPE’s acquisition of Juniper Networks, which closed in July 2025 after overcoming regulatory hurdles.

Networking revenue rose 148% from a year earlier to $2.69 billion, slightly ahead of analyst expectations of $2.68 billion.

The increase was largely driven by the inclusion of Juniper's business.

Chief Executive Officer Antonio Neri said the company’s performance reflects durable demand trends and successful execution of its strategy.

“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.”

Neri also said HPE expects to return approximately 75% of free cash flow to shareholders in fiscal 2027, signaling confidence in the company’s cash generation as AI infrastructure spending continues to expand.