HPE Stock Surges 37% in Single Day to Record High as AI Infrastructure Demand Drives Major Full-Year Guidance Raise
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Hewlett Packard Enterprise posted Q2 revenue of $10.7 billion, up 40% year-over-year and nearly $1 billion above consensus; the company lifted full-year EPS guidance from $2.30–$2.50 to $3.35–$3.45, saying it will hit its fiscal-2028 targets two years early — a sign that the AI infrastructure order wave is spilling from chips into servers and networking.
How big was the earnings beat?
Quarterly revenue hit $10.7 billion vs. the Street's $9.76 billion — a gap of nearly $1 billion.
Adjusted EPS came in at $0.79, beating consensus by $0.26; the year-ago figure was just $0.38 — more than doubled.
Net income swung from a $1.1 billion loss a year ago to a $595 million profit. This means → HPE didn't just beat on the top line; the bottom line flipped from red to black.
Which businesses drove the numbers?
Networking revenue surged 148% year-over-year to $2.69 billion, largely from the consolidation of Juniper Networks, acquired last year for $14 billion. In plain terms = the big-ticket acquisition is now showing up on the income statement.
Server revenue rose 32.7% to $5.45 billion, covering data-center servers powered by Nvidia Blackwell and other AI chips.
AI orders and AI backlog nearly doubled year-over-year; traditional server orders also doubled — CEO Antonio Neri attributed this to "customers modernizing compute infrastructure and investing in AI inference."
Why is the guidance raise so striking?
Full-year revenue growth guidance went from 17%–22% to 29%–33%.
Adjusted EPS guidance jumped from $2.30–$2.50 to $3.35–$3.45 — nearly a full dollar higher. This means → management sees a demand curve far steeper than it did three months ago.
Free-cash-flow guidance rose from $2 billion to $3.5 billion; HPE said it will reach its fiscal-2028 long-term targets two years ahead of schedule.
What does next quarter look like?
Q3 revenue guidance of $11.5–$12.1 billion tops the Street's $10.88 billion.
Q3 adjusted EPS guidance of $0.88–$0.93 dwarfs consensus at $0.54 — an even wider beat than this quarter's.
CFO Marie Myers also released a fiscal-2027 growth framework: revenue up 8%–12%, free cash flow expanding to at least $4.5 billion. This reflects deep management confidence in the durability of AI demand.
What does this mean for the broader sector?
Google, Amazon, Meta, and Microsoft are collectively expected to spend over $725 billion on AI infrastructure this year. HPE and Dell — which also beat expectations last week — are both riding this wave.
The Philadelphia Semiconductor Index is up 83% year-to-date; Dell has gained roughly 270%, Intel about 196%, storage-chip maker Sandisk 642%, and Western Digital 217%.
On the day HPE reported, software stocks rallied in sympathy: Datadog up 12%, Oracle up 9.9%, Salesforce up 9.7%. In plain terms = the AI spending spillover has spread from chips to servers, storage, and software — the entire chain is lifting.
Any new products or shareholder returns?
On the same day, HPE unveiled its 12th-generation ProLiant server at Computex in Taiwan, powered by Nvidia's new Vera CPU, expected to ship this fall.
Nvidia CEO Jensen Huang called the new server "an important new growth driver" during his keynote; the New York Stock Exchange announced plans to deploy it, supporting the processing of over one trillion messages per day.
The board declared a cash dividend of $0.1425 per share, payable around July 15; investment-management partner Chris Hsu joined the board effective immediately.
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