Hewlett Packard Enterprise reported fiscal third-quarter revenue of $12.2 billion, up 34% from a year earlier, and raised its full-year outlook after demand for servers, AI systems and networking equipment lifted sales and profitability.
HPE said GAAP diluted earnings per share were $1.06, compared with $0.21 a year earlier. Non-GAAP earnings were $1.11 a share, above the company’s outlook range of $0.88 to $0.93. The results reflect the pace at which businesses are buying infrastructure for artificial intelligence workloads and expanding data-center networks.
Chief executive Antonio Neri said record revenue, orders and profitability were supported by demand across the portfolio. The company raised its fiscal 2026 revenue-growth outlook to 34% to 37% and expects at least $3.75 billion in free cash flow, which measures cash left after operating and capital spending.
Networking sales rose fastest
Networking revenue increased 74.9% to $2.9 billion. Data-center networking revenue more than doubled to $382 million, while routing revenue rose 270% to $788 million. HPE’s figures include the effects of its Juniper Networks acquisition, so the gains should not be treated as a like-for-like measure of the older HPE business.
Cloud and AI revenue rose 25.4% to $9.0 billion. Server sales made up $6.8 billion of that total and rose 35.3%. Storage revenue grew 10.2% to $1.3 billion, while Financial Services revenue was broadly flat at $0.9 billion.
The mix matters because AI projects need more than powerful servers. They require fast links between systems, storage and networking equipment that can move large volumes of data. HPE is trying to sell that broader package, putting it in direct competition with server makers, networking specialists and cloud providers.
Margins improved alongside sales
HPE reported a GAAP gross margin of 40.1%, up 10.9 percentage points from a year earlier, and a GAAP operating margin of 11.4%. Operating cash flow reached $1.6 billion and free cash flow was $1.0 billion.
Investors should keep the GAAP and non-GAAP measures separate. HPE’s non-GAAP figures exclude items including amortisation of intangible assets, stock-based compensation, acquisition and disposal charges, and cost-reduction costs. The adjustments may help compare operating performance, but they are not a substitute for the GAAP results.
The next quarter has a higher bar
For the fiscal fourth quarter, HPE forecast revenue of $13.9 billion to $14.8 billion, GAAP diluted earnings per share of $1.12 to $1.22, and non-GAAP earnings of $1.20 to $1.30. The company also set a fiscal 2027 framework calling for revenue growth of 13% to 17%.
Those targets depend on HPE maintaining demand while integrating Juniper, managing component costs and converting a record order backlog into shipments. The company itself lists trade-policy uncertainty, supply-chain conditions, geopolitical tensions and the execution of the Juniper integration among the risks to its projections.
HPE declared a quarterly dividend of $0.1425 per share, payable on or about 16 October to shareholders of record on 17 September. The earnings release and the next quarterly delivery against the raised outlook will show whether AI infrastructure demand remains broad enough to support the company’s new growth targets.
