Hewlett Packard Enterprise delivered exceptional quarterly performance on Monday, moving its long-term financial targets ahead by two years as artificial intelligence infrastructure demand drives unprecedented growth, causing stock prices to climb 36% in after-hours trading.
The technology company, which faces competition from Dell and Super Micro Computer, is experiencing increased sales of servers and networking equipment as customers build systems to support AI programs like ChatGPT.
Major U.S. technology companies including Alphabet and Amazon are planning to invest more than $700 billion in AI infrastructure this year, creating significant opportunities for equipment providers like HPE.
These market conditions allowed HPE to increase its fiscal 2026 revenue growth projections to 29% through 33%, a substantial jump from previous estimates of 17% to 22%. The company now anticipates annual networking division revenue growth of 72% to 75%, rising from earlier projections of 68% to 73%.
The company achieved record revenue growth of 40%, reaching $10.68 billion and exceeding analyst predictions of $9.79 billion. Adjusted earnings per share hit 79 cents, surpassing expectations of 53 cents.
“The strength of the quarter was largely driven by the performance of our traditional server business, which is really focused on enterprise customers,” CFO Marie Myers told Reuters.
Myers explained that this quarter marked a significant transition as businesses began implementing agentic AI as a primary operational component.
On Monday, the company announced the appointment of Elliott Investment Management partner Christopher Hsu to its board under their cooperation agreement established in July of last year.
HPE stated that its updated fiscal 2026 projections for adjusted earnings per share and free cash flow exceed what the company previously expected to accomplish by fiscal 2028.
The company increased its annual adjusted earnings per share forecast to a range of $3.35 to $3.45, compared to earlier estimates of $2.30 to $2.50. Previous fiscal 2028 projections had anticipated adjusted earnings per share of at least $3.00.
HPE reported an AI backlog exceeding $6.3 billion, including AI systems and networking equipment for AI applications, with 61% of orders coming from government agencies and major corporate clients.
“We do expect to ship and convert significantly more AI revenue in the back half of the year. We expect that actually to peak in Q4,” Myers said.
The company also unveiled a fiscal 2027 growth strategy, projecting revenue increases of 8% to 12%, which exceeds analyst estimates of 5.8%.
