Hewlett Packard Enterprise reported second-quarter revenue and earnings that significantly exceeded expectations, as surging demand for AI and network infrastructure drives the veteran technology company to accelerate aggressively.
After the U.S. market close on June 1,$Hewlett Packard Enterprise (HPE.US)$reported second-quarter fiscal results, with Q2 revenue reaching $10.7 billion, up 40% year-over-year, exceeding analyst expectations by approximately $900 million.
Network revenue surged 148% year-over-year, while server revenue also beat expectations by nearly $1 billion. Adjusted earnings per share came in at $0.79, far surpassing the market consensus of $0.53—the largest positive earnings surprise since 2018.
Hewlett Packard Enterprise’s strong performance echoes that of $Dell Technologies (DELL.US)$ , which last week reported better-than-expected earnings. The robust results from both companies jointly underscore sustained strong demand for AI and traditional servers, driving broad gains across the server sector.
Revenue and earnings comprehensively surpassed expectations, setting multiple historical records.
For the fiscal second quarter ended April 30, 2026, Hewlett Packard Enterprise reported revenue of $10.7 billion, up 40% from $7.6 billion in the same period last year and exceeding the analyst consensus of $9.8 billion.
Net income stood at $624 million, compared with a net loss of $10.5 billion in the prior-year period. GAAP diluted earnings per share were $0.44, versus a loss of $1.26 per share a year earlier.
Adjusted earnings per share reached $0.79, up substantially from $0.38 a year ago and well ahead of the market expectation of $0.53—marking the largest positive earnings surprise since February 2018.
Profitability also improved markedly, with gross margin rising to 36.5%, an increase of 810 basis points from 28.4% in the same period last year.
Quarterly free cash flow reached $900 million, compared to a net outflow of $900 million in the same period last year, marking the second-highest free cash flow for any fiscal second quarter in the company's history.
Both server and networking businesses surged, driven primarily by AI demand.
The two brightest-performing segments this quarter were networking and server businesses.
Networking revenue surged 148.2% year-over-year to $2.7 billion, with data center networking revenue soaring 233.3% year-over-year to $320 million, and campus and branch networking revenue increasing 50.2% year-over-year to $1.3 billion.
Total revenue from the Cloud and AI segment rose 22.9% year-over-year to $7.7 billion, with server sub-segment revenue climbing 32.7% year-over-year to $5.45 billion—nearly $1 billion above analysts’ expectations of $4.66 billion.
CEO Antonio Neri stated that orders for traditional servers have achieved triple-digit growth, and the current backlog represents the largest in the company’s history. Antonio Neri said:
“Customers continue to invest in infrastructure modernization and AI expansion, and our results reflect the strength of our integrated networking portfolio.”
Full-year guidance significantly raised, two years ahead of long-term plan
Buoyed by a strong quarterly performance, Hewlett Packard Enterprise has raised its guidance for fiscal year 2026 and beyond.
The company has substantially increased its fiscal year 2026 revenue growth outlook from the previous range of 17% to 22% to a new range of 29% to 33%. The networking business growth forecast has been raised from 68%–73% to 72%–75%.
Adjusted earnings per share guidance for fiscal year 2026 has been significantly raised from the previous range of $2.30 to $2.50 to a new range of $3.35 to $3.45, representing an increase of $1.00.
For the third fiscal quarter, Hewlett Packard Enterprise expects revenue between $11.5 billion and $12.1 billion, above analysts’ expectation of $10.9 billion; adjusted earnings per share are projected to be between $0.88 and $0.93, surpassing the market’s expectation of $0.58.
Marie Myers, Chief Financial Officer of the company, stated: “Based on our performance, we are raising our fiscal year 2026 guidance.”
Hewlett Packard Enterprise also noted that its current execution pace is two years ahead of its own long-term financial plan for fiscal year 2028. For fiscal year 2027, the company anticipates revenue growth of 8% to 12%.
New servers unveiled in collaboration with NVIDIA; New York Stock Exchange becomes first customer
On the same day as its earnings release, Hewlett Packard Enterprise announced at the Computex exhibition in Taiwan the launch of its 12th-generation ProLiant servers, which will feature $NVIDIA (NVDA.US)$ ’s new Vera central processing unit and are expected to become available in the fall of this year.
In his keynote address, NVIDIA CEO Jensen Huang positioned the new servers as a “significant new growth driver” and stated that enterprises could use them to deploy Vera chips in real-world applications.
The New York Stock Exchange has announced it will deploy the product to support its daily operations handling over one trillion messages.
Antonio Neri stated that the new generation of ProLiant servers is optimized for Agentic AI workloads, emphasizing:
These workloads require high-performance servers with exceptional CPU capabilities to support real-time inference applications in fields such as financial services.
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Editor/joryn