Hewlett Packard Enterprise Co (NYSE:HPE, XETRA:2HP) shares jumped about 25% on Tuesday after the company reported fiscal second quarter results that topped expectations and significantly raised its full-year outlook, fueled by strong demand for AI infrastructure, servers and networking products.
For the quarter ended April 30, 2026, HPE reported revenue of $10.68 billion, up 40% from a year earlier and ahead of analyst estimates of about $9.78 billion.
Adjusted earnings per share came in at $0.79, well above consensus expectations of approximately $0.53.
The company said the results were driven by broad-based demand across its business, including a 32.7% increase in server revenue as enterprises continued investing in artificial intelligence and infrastructure modernization.
HPE CEO Antonio Neri said customers continued to invest in modernizing infrastructure and scaling AI deployments.
“HPE delivered an exceptional quarter with record-breaking revenue, higher-than-anticipated profitability, and increased free cash flow, reflecting strong execution and healthy demand across the business,” Neri said.
Following the quarter, HPE raised its fiscal 2026 outlook. The company now expects full-year revenue growth of 29% to 33%, up from prior guidance of 17% to 22%. HPE also increased its revenue growth forecast for the Networking segment to 72% to 75%.
The company now expects fiscal 2026 non-GAAP diluted EPS of $3.35 to $3.45, up from previous guidance of $2.30 to $2.50, while GAAP diluted EPS is projected at $2.42 to $2.52.
HPE said the improved outlook reflects continued momentum in AI-native infrastructure, networking demand, operational execution and stronger-than-expected profitability and cash generation. HPE also pulled forward its long-term financial targets by two years.
Wedbush analysts described the quarter as a major beat, noting it was HPE's largest earnings outperformance since 2018.
The firm highlighted strength in servers, where revenue rose 33%, supported by triple-digit growth in traditional server orders and $1.8 billion of AI systems orders. HPE ended the quarter with a $5.9 billion AI systems backlog.
The analysts noted that pricing, rather than unit volume growth, accounted for much of the server revenue increase, as manufacturers have been able to rapidly pass higher component costs through to customers while maintaining margins.
Wedbush also pointed to networking strength, estimating revenue growth of about 10% excluding the impact of the Juniper acquisition, while management reported even stronger order growth and a growing backlog.
The firm compared HPE's results to trends recently reported by Dell Technologies, arguing that rising demand for AI inference infrastructure combined with pricing benefits from higher component costs is creating meaningful revenue and earnings upside across the server market. Wedbush wrote that the trend appears likely to continue through the current quarter as component prices remain elevated.
One area of relative weakness was storage. Wedbush noted that both HPE and Dell underperformed storage-focused peers such as Pure Storage and NetApp, suggesting that some AI-related storage spending is flowing to private companies including VAST Data and DDN, while enterprise market share shifts may also be benefiting competitors.