- Investors rewarded HPE’s improved long-term outlook after it announced bringing forward its financial targets by two years.
- In Q2, HPE reported 40% year-on-year jump in revenue at $10.68 billion, well above expectations of $9.79 billion.
- The company also delivered its biggest earnings beat since 2018. The biggest boost came from its server business, which generated $5.45 billion, beating analyst estimates of $4.66 billio
Hewlett Packard Enterprise (HPE) shares rallied nearly 29% in pre-market trading on Tuesday after the company reported strong second-quarter results. Investors rewarded the company's improved long-term outlook after it announced bringing forward its financial targets by two years. The move was driven by strong demand for AI infrastructure.
In Q2, HPE reported 40% year-on-year jump in revenue at $10.68 billion, well above expectations of $9.79 billion. The company also delivered its biggest earnings beat since 2018. The biggest boost came from its server business, which generated $5.45 billion, beating analyst estimates of $4.66 billion.
The company's Cloud & AI revenue came in at $7.71 billion, above the estimates of around $6.87 billion. CFO Marie Myers told Reuters that a key shift this quarter was the growing adoption of agentic AI as a core enterprise workload. These developments have prompted the company to raise its fiscal 2026 EPS and free cash flow outlook above earlier fiscal 2028 projections.
The company now expects earnings per share between $3.35 and $3.45, up sharply from its earlier guidance of $2.30 to $2.50. HPE said that it is two years ahead of its long-term plan. CEO Antonio Neri told CNBC that traditional server bookings are up triple digits, with a record backlog.
"The biggest takeaway from the quarter was that HPE is benefiting from the same pricing dynamic that has recently driven upside at Dell - customers are absorbing materially higher server prices with little evidence of demand destruction," Morgan Stanley analysts were cited as saying by Reuters.
In Q2, HPE's net income reached $624 million, or 44 cents per share, compared with a loss a year earlier. The company raised its revenue growth forecast to 29%-33% for fiscal 2026 from 17%-22% earlier.
HPE shares closed at $47.14 on Monday, up 9.2%. In the last five sessions, the stock has jumped nearly 36%, driven by peer Dell's blowout results last week. In year-to-date terms, it is up 93%, according to data from Tradingview.
One key reason behind the sharp rise in the stock price of HPE was the announcement of a new server platform at Computex in Taiwan. The new 12th generation ProLiant server uses Nvidia's upcoming Vera CPUs, which are now in production and expected to ship in the fall.
