HPE raises annual forecasts as AI, networking demand lifts quarterly revenue

Enterprise IT infrastructure spending is strengthening, driven by continued investment in AI, server refresh cycles and rising demand for data center capacity, Citi analysts have said.

“It's clear to us that the market, the tailwinds in AI, particularly the adoption of AI in the enterprise, is really starting to settle in,” CFO Marie Myers told Reuters in an interview.

HPE expects enterprise adoption of AI to support growth beyond the current fiscal year, Myers said, after customers spent fiscal 2025 and 2026 testing AI systems and beginning deployments that are showing productivity gains.

Myers noted that supply remained constrained, with memory being the main bottleneck, followed by NAND, CPUs and drives, though HPE has signed longer-term supply agreements to improve access to components.

“Demand is far outstripping supply.”

Third-quarter revenue grew 33.6% to $12.21 billion, beating estimates of $11.91 billion. HPE earned $1.11 per share on an adjusted basis, ahead of estimates of 93 cents.

HPE's results follow strong forecasts from rivals Dell DELL.N and Super Micro SMCI.O as Big Tech's AI spending is set to exceed $730 billion this year.

HPE forecast fiscal 2026 revenue growth of 34% to 37%, up from 29% to 33% previously, and raised its adjusted earnings forecast to between $3.75 and $3.85 per share, from $3.35 and $3.45.

For fiscal 2027, HPE now projects revenue growth of 13% to 17%, up from 8% to 12%, with adjusted EPS growth of 16% to 20%, versus 12% to 16% forecast previously.