HPE Q2 revenue surges 40% as its AI infrastructure spending accelerates

Hewlett Packard Enterprise posted record second-quarter revenue of $10.68 billion, up 40% year over year, as companies, governments, and cloud providers accelerated spending on AI infrastructure. The stock rose more than 9% in regular trading and as much as 37% in extended sessions.

HPE Q2 revenue surges 40% as its AI infrastructure spending accelerates

Analysts were expecting HPE to generate revenues of $9.82 billion in the quarter, while actual figures stood at $10.68 billion, an 8.7% upside.

Earnings per share stood at $0.79, almost double last year’s $0.38 and exceeding the consensus estimate by more than 46%.

The growth engine was HPE’s Cloud & AI segment, which generated $7.71 billion in revenue. Within that division, server revenue reached $5.45 billion, up 32.7% year over year.

The Cloud & AI segment grew 22.9% overall, whereas networking revenues rose sharply by 148.2%, following the acquisition of Juniper Networks and expanding demand for data-center networking products.

The Financial Times reported that HPE shares soared on what it described as “booming demand for AI infrastructure.”

HPE raises full-year outlook as AI server demand strengthens

Management upgraded its fiscal 2026 outlook and announced a fiscal 2027 growth plan. HPE now anticipates revenue growth of 29 to 33 percent in fiscal 2026, with adjusted EPS of $3.35 to $3.45, up from a prior $2.30 to $2.50. It also raised its free cash flow outlook to at least $3.5 billion.

As per Reuters, HPE had a total AI backlog worth $6.3 billion, of which 61 percent came from government agencies and large enterprises.

According to CFO Marie Myers, companies are turning to AI workloads in increasing amounts, which boosts sales of both HPE’s dedicated AI offerings and its regular servers.

AI infrastructure boom lifts HPE, Dell, and other technology stocks

HPE’s performance confirms a trend across the AI infrastructure market. While HPE reported 40% total revenue growth and 32.7% server growth, its rival Dell Technologies has posted even faster expansion.

Dell disclosed that AI server revenue reached approximately $16.1 billion in its latest quarter, representing 757% year-over-year growth, while its AI server backlog reached $51.3 billion. Dell raised its full-year AI server revenue guidance to $60 billion, up from $50 billion in February.

Supermicro is still among the fastest-growing pure-play AI server vendors. The company reported fiscal 2025 revenue growth of approximately 47%, reaching $22 billion, driven largely by demand for GPU-based AI systems.

Unlike Dell and HPE, Supermicro remains more concentrated in server hardware and, therefore, more exposed to component supply constraints and pricing pressures.

Can HPE sustain AI server growth amid rising competition?

HPE’s next test is execution. Investors will be watching whether the company’s $6.3 billion AI backlog converts into revenue at the margins management expects.

Competition is intensifying. Dell continues to scale its AI factory strategy around Nvidia-powered systems, while Supermicro remains a leading supplier of high-density AI servers.

Another area to monitor is networking. Although HPE’s networking division delivered exceptional growth overall, some analysts noted relative softness in portions of the data-center networking business compared with expectations.

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