Quick Facts
- HPE revenue jumped 40% to $10.68 billion, crushing analyst estimates of $9.78 billion
- Stock soared 32% in after-hours trading on record AI server orders of $1.8 billion
- Company raised fiscal 2026 revenue growth outlook to 29-33% from previous 17-22%
Hewlett Packard Enterprise posted record-breaking second quarter revenue of $10.68 billion, driven by explosive demand for AI servers that sent shares skyrocketing 32% in after-hours trading on June 1.
The results crushed analyst expectations on every metric. Revenue grew 40% year-over-year, beating estimates by $900 million. Adjusted earnings per share hit $0.79, far exceeding the $0.53 forecast. Free cash flow reached $915 million, an improvement of $1.8 billion.
CEO Antonio Neri said traditional server orders increased triple digits as customers modernize infrastructure and invest in AI inferencing. The company recorded $1.8 billion in AI systems orders, creating what Neri called “the biggest backlog the company has ever seen.”
Trading volume hit 75.6 million shares, about 287% above the three-month average of 19.6 million shares. The stock jumped from around $47 to the mid-$60s range.
The networking division, boosted by the Juniper Networks acquisition, delivered revenue of $2.7 billion, up 148% year-over-year. Cloud and AI revenue reached $7.7 billion, growing 23% with improved margins despite supply constraints affecting some AI server shipments.
Wall Street analysts responded by raising price targets across the board. Citi bumped its target to $39 from $27, JPMorgan moved to $37 from $27, and Evercore ISI increased to $40 from $30. All cited stronger-than-expected AI infrastructure demand and HPE’s underappreciated earnings power.
HPE significantly raised its financial outlook for the rest of 2026. The company projected third-quarter revenue between $11.5 billion and $12.1 billion, exceeding analyst expectations of $10.88 billion. Fiscal 2026 adjusted earnings per share guidance jumped to $3.35-$3.45 from the previous $2.30-$2.50 range.
“HPE delivered an exceptional quarter with record-breaking revenue, higher-than-anticipated profitability, and increased free cash flow,” Neri said. The CEO noted customers continue investing in infrastructure modernization and AI scaling.
Holger Mueller of Constellation Research called the performance “undoubtedly stellar in every way,” noting HPE crossed the $10 billion quarterly revenue milestone for the first time. He highlighted a remarkable $1.6 billion swing to profit from losses four quarters ago.
Despite the strong results, HPE faces ongoing challenges. Neri acknowledged continued pressure from the global memory crunch, with elevated costs expected to persist until at least 2027. Component costs for DRAM and NAND remain inflated, affecting pricing strategies.
The surge reflects HPE’s growing position in AI-driven computing as enterprises increase infrastructure spending. The Juniper acquisition proved particularly valuable, expanding networking capabilities and market reach at a critical time for AI infrastructure demand.
Read more: HPE posts huge earnings beat thanks to AI servers, sending its stock skyward