Hewlett Packard Enterprise (NYSE: HPE): AI Growth Drives Record Results

• Record Performance: Hewlett Packard Enterprise (NYSE: HPE) reported fiscal third-quarter 2026 revenue of $12.2 billion, up 34% year over year, and record non-GAAP diluted EPS of $1.11.
• Higher Outlook: HPE raised its fiscal 2026 revenue-growth forecast to 34%–37% and its fiscal 2027 projection to 13%–17% amid strong AI and networking demand.
• Valuation Concerns: Deutsche Bank raised its HPE price target from $62 to $68, while GuruFocus classified the stock as “significantly overvalued” relative to its $25.55 GF Value estimate.

Hewlett Packard Enterprise (NYSE: HPE) provides enterprise servers, storage systems, networking equipment, cloud-management tools, and AI infrastructure.

For the fiscal third quarter ended July 31, 2026, HPE reported record revenue of $12.21 billion, up 34% year over year. GAAP diluted EPS reached $1.06, while non-GAAP diluted EPS rose to $1.11, exceeding analysts’ estimate of approximately $0.93.

The Cloud & AI segment generated $9.04 billion in revenue, up 25.4%, supported by a 35.3% increase in server revenue. Networking revenue climbed 74.9% to $2.89 billion, partly reflecting the addition of Juniper Networks. Total customer orders increased 42%, producing a record backlog.

HPE raised its fiscal 2026 revenue-growth outlook from 29%–33% to 34%–37% and increased its non-GAAP EPS forecast to $3.75–$3.85. For fiscal 2027, the company now expects 13%–17% revenue growth, 16%–20% non-GAAP EPS growth, and at least $5 billion in free cash flow.

HPE also expanded its partnership with Oracle (NYSE: ORCL), which plans to use HPE Juniper Networking products in its AI data centers.

Following the results, Deutsche Bank analyst Gianmarco Conti maintained a Buy rating and raised his HPE price target from $62 to $68. From a share price of approximately $51.83, the target implied potential upside of about 31.2%.

However, HPE shares declined after the earnings announcement as investors focused on shortages of memory, processors, NAND flash, and storage drives. These constraints could restrict shipments and pressure margins despite strong customer demand.

Valuation also remains a concern. GuruFocus estimated HPE’s proprietary GF Value at $25.55, roughly half the prevailing market price, and classified the stock as “significantly overvalued.” Nevertheless, that historical valuation model may not fully reflect HPE’s expanded business following the Juniper acquisition and its accelerating AI-related growth.