By Jaspreet Singh
June 1 (Reuters) - Hewlett Packard Enterprise posted record second-quarter results on Monday, prompting the company to accelerate its long-term financial goals by two years, as expansion of AI data centers boosts demand for its servers and networking products.
Shares of the company rose 30% in extended trading after HPE also appointed Elliott Investment Management partner Christopher Hsu to its board in connection with their cooperation agreement.
HPE, which competes with Dell and
Super Micro Computer, is benefiting as customers increasingly buy server and data center equipment to power AI applications such as ChatGPT amid a memory chip crunch.
U.S. tech giants including Alphabet and Amazon plan to spend over $700 billion on AI infrastructure this year, which would bolster demand for suppliers such as HPE.
That helped HPE to raise fiscal 2026 revenue growth outlook to between 29% and 33%, up from its prior expectations of 17% to 22%. It now expects annual networking segment revenue growth of 72% to 75%, a sharp increase from 68% to 73%.
HPE reported record revenue growth of 40% to $10.68 billion, beating LSEG-compiled analysts' average estimate of $9.79 billion. The adjusted earnings per share of 79 cents topped expectations of 53 cents.
"The strength of the quarter was largely driven by the performance of our traditional server business, which is really focused on enterprise customers," CFO Marie Myers told Reuters.
She said the key difference this quarter was the anticipated shift where enterprises significantly adopted agentic AI as a core workload.
HPE said its revised fiscal 2026 ranges for adjusted EPS and free cash flow are higher than what it projected the company would achieve by fiscal 2028.
The company raised annual adjusted EPS in the range of $3.35 to $3.45, compared with an earlier projection of $2.30 to $2.50. It had anticipated adjusted EPS of at least $3.00 for fiscal 2028.
"Customers continue to invest in modernizing their infrastructure and scaling AI," CEO Antonio Neri said.
HPE also introduced a fiscal 2027 growth framework, expecting revenue growth of 8% to 12%, adjusted EPS growth of 12% to 16% and free cash flow of at least $4.5 billion.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Shreya Biswas)
