Hewlett Packard Enterprise (HPE) shares jumped about 30 percent after the company reported second‑quarter results that materially beat expectations. The outperformance was driven largely by rising demand for AI infrastructure and faster‑than‑expected profitability from that business.
Key figures and performance
- Adjusted earnings per share (EPS) were $0.79, compared with the analyst consensus of $0.53 — HPE’s largest EPS surprise since February 2018.
- Revenue totaled $10.68 billion, versus $9.79 billion expected. Revenue rose 40% year‑over‑year.
- The Cloud & AI segment generated $7.71 billion in revenue, above the market expectation of $6.87 billion.
- Server revenue, reported as part of the cloud and AI division, increased to $5.45 billion versus analysts’ $4.66 billion forecast.
For the market, the especially important takeaway is that the server business is not only growing but producing significant profits tied to AI investment.
Management commentary and guidance
CEO Antonio Neri said customers are continuing to invest heavily in modernizing infrastructure and building AI capacity. HPE reported triple‑digit growth in traditional server orders and said order backlog is at a record high.
The company raised its fiscal 2026 adjusted EPS guidance from the prior $2.30–$2.50 range to $3.35–$3.45, effectively increasing the midpoint by about one dollar. HPE said it is currently two years ahead of its own long‑term financial plan.
Market reaction and product announcement
Investors re‑priced HPE after the results, sending the stock up roughly 30 percent. The move was supported by a product announcement at Computex, where HPE on Monday unveiled a new server rack built around Nvidia Vera central processors. HPE said millions of the new processors are already being produced and that they could become available in the fall.
Nvidia CEO Jensen Huang told attendees at Computex that Vera could become a new growth engine for Nvidia. One prominent customer for the new HPE ProLiant servers is the New York Stock Exchange, which plans to use Nvidia chips and HPE infrastructure to support processing of more than a trillion messages per day.
Risks
HPE warned that a global memory shortage and high component prices remain risks and could persist into next year, putting pressure on margins amid intensifying competition.
This article does not constitute investment advice or a recommendation.
