‘We don’t see a cliff,’ said HPE CEO Antonio Neri. ‘In many ways I think customers are prioritizing getting access to technology now faster than ever before because nobody wants to be left behind when it comes down to deploying AI.’
HPE shares soared 29 percent in after-hours trading Monday after the company raised its Fiscal Year 2026 outlook for “cumulative Networks for AI orders” to $2 billion.
HPE’s $13.4 billion acquisition of Juniper Networks is paying off faster than anticipated, with the company raising annual growth expectations for its networking segment—which includes Networks for AI—to about 10 percent on a normalized basis, which factors in the integration of Juniper.
“The momentum we have in networking is outstanding across all customer segments as well as product segments,” said HPE President and CEO Antonio Neri during a conference call to discuss the company’s second fiscal quarter results.
Overall, HPE reported a “record orders backlog” in the second fiscal quarter, ended April 30, with orders more than doubling year over year even as the company delivered a 33 percent increase in server sales to $5.5 billion in the wake of agentic AI acceleration.
The record-breaking results sent HPE shares up $12.96 in after-hours trading to an all-time high $59.96 per share. Shares Monday had closed up 9 percent to $47.00.
Neri said customer demand remains high even in the face of increased prices sparked by the memory shortage.
“We don’t see a cliff,” Neri said. “In many ways I think customers are prioritizing getting access to technology now faster than ever before because nobody wants to be left behind when it comes down to deploying AI.”
AI inferencing is growing among customers, Neri said. “We expect that AI inferencing is going to be an accelerator of our demand as we go forward and therefore it points to it being durable in our demand and our ability to convert that,” he said.
Within HPE itself, the company has more than 250 use cases, mostly agentic AI, that have already been deployed, said Neri.
The large sales pipeline remains “multiples of the current backlog,” said Neri. “When you look at that demand in the pipeline, it is driven by the new use cases we see with the deployment of AI, the buildouts of new data centers for AI and then the modernization taking place in the enterprise.”
The backlog and the “long-term supply agreements” HPE has to deliver for customers gives the company the “confidence” to raise guidance for the current fiscal year and provide a 2027 Fiscal Year forecast, said Neri.
HPE Increases Outlook
HPE raised its Fiscal Year 2026 consolidated revenue outlook to high teens on a normalized basis.
HPE has not seen any double booking or cancellation of orders, Neri said. “Because of the pipeline we have, we feel comfortable about the durability of demand, which will drive this sustained momentum,” he said.
HPE raised its full-year Cloud and AI revenue segment growth to the low 20 percent range, up from its mid- to high-single-digit range.
HPE also raised its full-year non-GAAP diluted net earnings per share by a full dollar to be in the range of $3.35 to $3.45.
The 2026 guidance effectively puts HPE two years ahead of what it had planned to deliver in Fiscal Year 2028, said Neri.
Besides raising its Fiscal Year 2026 outlook, HPE also forecast Fiscal Year 2027 revenue growth in the range of 8 percent to 12 percent, with non-GAAP diluted earnings per share growth expected to be in the range of 12 percent to 16 percent. HPE expects to have more than $3.5 billion in free cash flow by Fiscal Year 2028.
Overall, HPE reported non-GAAP diluted net earnings per share of 79 cents on a 40 percent increase in sales to $10.7 billion. That was well above the Zacks Investment Research consensus of 54 cents per share on sales of $9.82 billion.
Networking sales for the quarter were $2.7 billion, up double digits on a normalized basis, with orders “growing significantly faster than revenue,” said Neri.
On a normalized basis, HPE’s routing business grew nearly 30 percent, while enterprise data center switching was up 20 percent, said Neri.
Channel Sales Up 64 Percent
In an interview with CRN before the conference call, Neri said the exceptional results translate into “profitable growth” for partners, with sales through the channel in the quarter up 64 percent year over year, accounting for 67 percent of HPE’s sales. Juniper sales through the channel on a normalized basis were up 14 percent, which accounts for 89 percent of the overall networking sales, said Neri.
Neri said the HPE team has “executed extremely well” on the Juniper integration, moving quickly on all fronts since the deal was completed just 11 months ago.
“When you think about an integration of this magnitude, doing it so fast, with integration of sales forces, clear messaging to the channel, rationalization of the footprint, announcement of road maps, new product introductions, it has been fantastic,” said Neri. “In my view this is a great example of how to do a large acquisition at scale quickly and so efficiently.”
Patrick Shelley, CTO at PKA Technologies, a Montvale, N.J.-based HPE partner, said HPE data center networking momentum is growing as a result of the Juniper acquisition.
“HPE now has a true AI data center networking workhorse portfolio,” said Shelley. “HPE is price-competitive with a real self-driving AI network story that customers are excited about. More and more customers are looking at the benefits provided by the Juniper Mist AI networking solution. It’s all about improved troubleshooting and networking automation. When we do demos for customers, they see improved network troubleshooting as a big game-changer.”
Shelley said HPE’s full end-to-end AI architecture strategy is appealing to customers interested in consolidating their networking, compute and storage on a single HPE platform.
“Customers want end-to-end solutions,” he said. “A lot of customers tested AI on their networks, and it failed with poor performance,” he said. “Customers realize now that networking is a big piece of AI. You need the right networking backbone for AI to work correctly.”
HPE’s full-portfolio AI architecture supported by a single company creates a “huge” advantage, said Shelley. “Customers are tired of the finger pointing that comes from multi-OEM environments,” he said. “Everything supported by one OEM gives customers peace of mind.”
Shelley credited Neri for delivering acquisitions that are paying off for HPE and its partners. “Antonio had the vision and the technical background to lead HPE into the future,” he said. “His technical background has definitely benefitted HPE. His technology vision has been spot-on.”
Neri, for his part, said the “record-breaking results across all metrics” are the result of a strategy that is paying off in the wake of “very disciplined execution” and “unbelievable strong” demand.
“The Juniper acquisition in my mind has been a home run and is proving to be a big source of shareholder value creation,” said Neri. “Therefore we believe the strategy is working. I think our portfolio is stronger than it has ever been, and you are going to see more of that in two weeks [at the HPE Discover conference].”
