Hewlett Packard Enterprise (HPE) reported a significant earnings and revenue beat driven by strong sales of artificial intelligence (AI) servers in its latest fiscal quarter. The company posted earnings per share of 79 cents, well above analysts’ consensus of 53 cents, marking its highest earnings surprise since early 2018. Revenue climbed to $10.68 billion, exceeding Wall Street's projection of $9.79 billion and reflecting a 40% increase year-over-year.
Central to this outperformance was the Cloud & AI segment, which generated $7.71 billion—beating the expected $6.87 billion. Within this segment, HPE’s server business stood out, pulling in $5.45 billion against forecasts near $4.66 billion. Despite slimmer profit margins typically associated with AI server sales, HPE lifted overall net earnings to $624 million, a turnaround from a $1.05 billion net loss during the same period last year.
The networking division also contributed notably with revenue surging 148% to $2.7 billion. HPE’s leadership attributed this robust performance to growing customer investments in infrastructure modernization and AI expansion, particularly in sectors demanding on-premises AI computing rather than cloud services. This focus aligns with HPE’s customer base, which includes enterprises and government agencies, contrasting with cloud hyperscalers that often opt for bulk, non-branded hardware.
Following these results, HPE raised its full-year earnings forecast by a full dollar per share to a range of $3.35 to $3.45, significantly above the prior guidance of $2.30 to $2.50 and well ahead of analysts’ estimates around $2.43. The company emphasized an unprecedented backlog of server orders, fueled by strong demand from security-sensitive industries, underscoring sustained momentum across its product lines.