Dive Brief:
- HPE saw networking revenues spike 150% year over year to $2.8 billion during the fourth quarter of its 2025 fiscal year, as revenue in servers declined 5% to $4.5 billion, VP and CFO Marie Myers said during a Thursday earnings call.
- The company’s $14 billion acquisition of Juniper Networks triggered a midyear networking makeover at HPE. “In the five months since closing the transaction, we have brought together our teams, technologies and go-to-market strategies,” HPE President and CEO Antonio Neri said. “We are building a modern, secure AI-native networking portfolio, one that encompasses campus and branch, data center switching, routing and security.”
- HPE server shipments slowed as infrastructure buildout delays mounted, Myers said, adding, “We expect AI demand to remain uneven as some of our larger sovereign customers are placing orders with extended lead times, which may defer shipments to future periods.”
Dive Insight:
Massive hyperscaler capital investments in AI infrastructure projects are a boon for the tech industry, as hundreds of billions of dollars poured into data center construction this year. Yet there have been supply chain hiccups along the way.
The server market more than doubled year over year to nearly $100 million during the first quarter of the year and is expected to grow 80% in 2025 to over $455 million, according to IDC research.
HPE was one of the beneficiaries. Despite the Q4 falloff, server revenues grew 10% year over year to $17.7 billion during the 12 months ending Oct. 31. The company’s AI business generated $6.8 billion in orders, Neri said.
AI compute demand has, however, triggered memory chip shortages that are already impacting prices, which have more than doubled in some market segments, Reuters reported Tuesday.
HPE has not been immune to ongoing scarcities. The company raised its server prices as the market for dynamic random-access memory and NAND flash memory chips tightened and is prepared to do so again, Myers said.
“We are monitoring the DRAM and NAND markets daily and taking mitigating actions to preserve our margins,” said Myers. “This includes partnering with our suppliers, taking pricing actions and working with our customers to shape demand.”
The company’s smaller but growing networking business remains in transition, as the Juniper integration continues. On Wednesday, HPE unveiled an AI platform that combines the HPE Aruba Networking Central and HPE Juniper Networking’s Mist operations platforms. It also rolled out AI-optimized HPE Juniper Networking switches and routers.
HPE is consolidating on the sales side, as well.
“We are combining our two networking sales teams into a unified organization and implementing a new sales coverage model,” Myers said. “Starting in January, we will also introduce a unified sales compensation plan, promoting consistency across the integrated networking team.”
