HPE

Image source: The Motley Fool. Wednesday, Sept. 2, 2026 at 4:30 p.m. ET Chief Strategy Officer - Shannon Cross President and Chief Executive Officer - Antonio Neri Chief Financial Officer - Marie Myers Operator: Good day, and welcome to the Third Quarter 2026 Hewlett Packard Enterprise Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ms. Shannon Cross, Chief Strategy Officer. Please go ahead. Shannon Cross: Good afternoon. I'm Shannon Cross, Chief Strategy Officer for HPE. I'd like to welcome you to our fiscal 2026 third quarter earnings conference call with Antonio Neri, HPE's President and Chief Executive Officer; and Marie Myers, HPE's Chief Financial Officer. Before handing the call to Antonio, let me remind you that this call is being webcast. A replay of the webcast will be available shortly after the call concludes. We have posted the press release and the slide presentation accompanying the release on our HPE Investor Relations web page. Elements of the financial information referenced on this call are forward-looking and are based on our best view of our business and the external factors affecting us as we see them today. HPE assumes no obligation and does not intend to update any such forward-looking statements. We also note that the financial information discussed on this call reflects estimates based on information available at this time and could differ materially from the amounts ultimately reported in HPE's quarterly report on Form 10-Q for the fiscal quarter ended July 31, 2026. Figures used in verbal remarks are rounded for ease of discussion. For more detailed information, please see the earnings materials as well as disclaimers relating to forward-looking statements that involve risks, uncertainties and assumptions. Please refer to HPE's filings with the SEC for a more detailed discussion of these risks. For financial information that we are showing on a non-GAAP basis, we have provided reconciliations to the comparable GAAP information. Please refer to the tables and slide presentation accompanying today's earnings release on our Investor Relations website for details. Throughout this conference call, all revenue growth rates, unless noted otherwise, are presented on a year-over-year basis. Unless otherwise noted, all financial metrics and growth rates discussed today are non-GAAP and EPS refers to non-GAAP diluted net earnings per share. Certain financial information featured in the presentation today has been normalized to include Juniper Networks results as of the beginning of HPE's fiscal year 2025. Antonio and Marie will reference our earnings presentation in their prepared comments. We will also be disclosing records for certain financial metrics during the presentation. Please refer to our end notes in the presentation while reading these statements. With that, let me turn it over to Antonio. Antonio Neri: Thank you, Shannon, and good afternoon, everyone. Our strategy is proving itself again this quarter. We delivered another set of record financial results which demonstrates the durability of our profitable growth momentum and disciplined execution across the company. We exceeded all our company-wide financial commitments, achieving record results across revenue, gross margin, non-GAAP operating profit and earnings per share. AI has become a multiyear growth driver, expanding demand across our HPE portfolio. Customer demand in the quarter accelerated across both business segments with orders growing faster than revenues. We booked more orders than any prior quarter in our history, resulting in a record-breaking backlog for the company. Supply constraints continue to affect our ability to fulfill the increased customer demand. We are collaborating very closely with our partners to secure additional multiyear supply agreements. We're also providing our customers with alternative product configurations and deeper planning interlocks to better forecast supply availability. In fiscal Q3, HPE delivered record revenue of $12.2 billion, up 34% from a year ago. Our HPE revenue growth year-to-date has risen about twice as fast as it did over the same period last year. HPE non-GAAP gross margin was a record of 40%. We generated record non-GAAP operating profit of $2 billion, 2.5x more than a year ago. Non-GAAP earnings per share was $1.11, another record and the first time we achieved more than $1 in non-GAAP EPS in a single quarter. Our outstanding operating results translated directly into stronger cash generation, resulting in our highest free cash flow ever for a third quarter at $958 million. Last quarter, we updated our fiscal 2026 outlook and introduced our initial fiscal 2027 growth framework. Thanks to our record results, record orders and record backlog, we are raising our outlook for both fiscal 2026 and fiscal 2027. Marie will discuss the details shortly. Before I hand over the call to Marie, I want to provide some observations about the market and our business segment performance. Also want to note an important milestone regarding our Juniper Networks acquisition. In August, a U.S. Federal Court approved our settlement with the Department of Justice, saying, "It serves the public interest." We are pleased with the outcome, which reinforces our confidence in the long-term value of bringing these two great networking portfolios together. A year after closing the Juniper Networks acquisition, our integration plan and cost synergies remain ahead of schedule. The business performance continues to strengthen through expanded innovation and strong execution. The enhanced ability to compete is already driving more innovative networking solutions for customers and higher profitable growth for shareholders. Order bookings and revenue for our networking products and services reached record levels despite supply constraints, which limited our ability to convert the higher demand into revenue in the quarter. Campus & Branch had record revenue as customers modernize aging edge infrastructure and deploy AI-driven network operations. Orders were ahead of revenue, demonstrating the differentiation of our self-driving networks and the versatility across multiple cloud deployment models. Routing and data center switching demand accelerated in the quarter with orders substantially ahead of revenue and our backlog at its highest ever. Our backlog reflects strong customer demand from hyperscalers and neo-clouds for our routers, switching and AI-driven operations software, as they continue to increase their AI cloud CapEx infrastructure investments. Growth in our backlog shows strong customer demand is running ahead of available supply. We expect to convert more orders into revenue in Q4, which give us even greater confidence in sustaining our networking growth in fiscal 2027. Today, we announced an expanded collaboration with Oracle to accelerate gigawatt scale AI infrastructure. Oracle will deploy HPE Juniper networking routers and switches across one of the largest AI cloud infrastructure build-outs. HPE is uniquely positioned to support Oracle with a network for AI portfolio, which is one of the most comprehensive in the industry. SASE and security also contributed to our growth. Our strong performance in firewall, SD-Branch and branch SRX reflects growing customer demand for networking and security that operates as one converged solution. I hope you will attend our upcoming Networking Investor Day later this month to hear more about how our networking strategy, innovation and business momentum are giving us even greater confidence in the opportunity ahead. While our networking segment continues to strengthen through our thoughtful integration, our Cloud & AI segment continues to perform exceptionally well in a very supply-constrained environment. We delivered record revenue, operating profit and operating margin. AI is beginning to inflect beyond early proof-of-concept training deployments into a broader enterprise workflow transformation opportunity. Customers are increasingly investing in new agentic AI applications and AI inferencing, requiring accelerated computing infrastructure, secure data storage access and enterprise-grade cloud management. Our comprehensive Cloud & AI portfolio is perfectly positioned for this market inflection. We continued to experience strong demand across traditional servers, AI systems, storage, private cloud solutions and GreenLake cloud services. The server product category drove the outperformance with high demand for our traditional servers and AI systems. We saw strong demand from large enterprises, neo-cloud service providers and sovereign customers. We expect demand to remain exceptionally high as our pipeline remains multiples of our backlog. A fundamental shift in the server business is becoming quite clear. The way customers value their IT infrastructure is changing. Their focus is not just whether a server can run AI workloads, but also how it can enable entirely new business workflows using new AI applications. We are seeing AI-related enterprise initiatives receive higher levels of investment than traditional IT projects. There is more top-level executive engagement in making those investment decisions, including company Boards, which are championing AI technology to unlock further business transformation potential. Storage had a standout quarter with record revenue. It benefited from our decision to focus on our own IP offerings by delivering a modern multi-data protocol platform for the AI era. Customers are beginning to evaluate where the AI workloads can be run most efficiently with the best secured data management and the lowest cost per token. Organizations are still in the process of modernizing data storage environments while preparing for the next generation of AI-driven workloads and applications. They want data to be close to their AI infrastructure and they want control over sensitive information. These trends are driving strong demand for our HPE Alletra MP storage solutions. We are confident our comprehensive data storage value proposition will continue to accelerate this momentum in our storage business. Our private cloud AI platform allows customers to manage enterprise AI applications and AI agents, while keeping control of data, governance, security and operations. Demand for PCAI is strong from enterprise customers that want to optimize the token economics of large-scale AI deployments on premises. That is rapidly scaling our order bookings and the size of our customer base. GreenLake remains one of our greatest differentiators because it allows customers to manage infrastructure and software through a secure hybrid cloud operating model regardless of where our traditional and new AI workloads reside. Customers are broadening their utilization of our GreenLake cloud services, expanding their existing usage by consuming our new software and intelligent cloud services, which increases our net retention rates. In Q3, the number of GreenLake customers grew 18% to 52,000, up from 44,000 a year ago. HPE Financial Services continues to deepen our customer relationships and offer a meaningful competitive advantage, which has become especially important as more customers look for financing options to help with their AI investments. As a result, HPE FS generated third quarter records in financing volumes, residual value and return on equity. In closing, HPE delivered another outstanding quarter, exceeding our company-wide commitments and demonstrating the ongoing differentiation in our strategy and its execution. As we look ahead, the same underlying drivers of our performance give us confidence in continuing to deliver higher profitable growth, higher cash flow generation and higher capital returns for shareholders. I want to thank our team members for their focus and strong execution so far this year. Our amazing talent and culture has set our performance apart this quarter and in fiscal 2026 to date. With that, let me turn the call over to Marie. Marie? Marie Myers: Thank you, Antonio, and good afternoon, everyone. We delivered another strong quarter, reflecting accelerating demand for AI and solid networking momentum, together with disciplined execution across the company. The demand environment remains robust as orders continue to outpace revenue. Investment in AI infrastructure is increasing at a rapid pace with enterprise spending focused on agentic AI workloads and AI inferencing. Importantly, this opportunity is broadening across use cases, customer verticals and geographies, reinforcing the value of HPE's expanded portfolio and our ability to provide customers with integrated solutions across the enterprise technology stack. We remain focused on executing against strong customer demand navigating a dynamic supply environment, managing mix and input costs while driving operating leverage. This discipline is reflected in our financial performance, supporting durable, profitable growth in fiscal 2026 and 2027. Let me walk you through the results. Revenue of $12.2 billion increased 34%, exceeding the high end of our guidance range with order growth up 42% on a normalized basis, led by demand in traditional servers, AI systems and networking. Gross margin exceeded 40% driven by disciplined pricing in traditional servers and increased networking mix. Going forward, we expect our gross margin to moderate toward more historical levels driven by the growth in AI systems and the normalization in traditional servers, offset by the growing mix of networking. Operating expense was up 17% sequentially due to higher variable compensation reflecting our record financial results. We expect operating expense to decrease in FY '27 as variable compensation normalizes, and we see continued benefit from Catalyst transformation efficiencies and Juniper integration synergies. Operating profit was $2 billion, up nearly 40% sequentially. Operating margin of 16.2% expanded by 290 basis points sequentially, driven by gross margin expansion and operating leverage. EPS was $1.11, well above the high end of our guidance. GAAP EPS was $1.06. We delivered Q3 free cash flow of $958 million, driven by strong operating profit as well as collections. Now let's turn to our segment results. Networking revenue of $2.9 billion was up 10% on a normalized basis, consistent with our outlook. Orders increased 36%, about 3.5x faster than revenue. Order growth was broad-based across the portfolio, led by AI infrastructure-related investments in data center switching and routing, and strong demand for self-driving networks in Campus & Branch. Networks for AI demand accelerated in Q3, with orders reaching a new high of $700 million, up triple digits. Our portfolio and competitive position in scale-up, scale-out and scale-across strengthened by the recent launch of our direct liquid cooled Tomahawk 6-based switch and our differentiated PTX and MX routing portfolio. Our pipeline continues to increase with further acceleration expected as we bring the Helios platform to market. We expect networks for AI to be a meaningful growth engine for the company. Cumulative networks for AI orders were $2.2 billion, surpassing our FY '26 target. As a result, we are increasing our year-end target to $2.5 billion to $3 billion. To meet this order growth, we have more than doubled our networking purchase commitments quarter-over-quarter. Within networking, Campus & Branch revenue grew 8% on a normalized basis. Routing revenue growth accelerated to 23% as we benefit from increasing demand for our on- and off-ramp AI network infrastructure. Security grew 12%, while data center networking revenue declined 6% due to shipment timing driven by supply constraints. Order momentum was much stronger across most product categories with data center switching and routing up high double digits and Campus & Branch up low teens. We remain focused on improving order conversions to drive faster top line growth and greater scale. Across customer verticals, enterprise revenue grew 12% and service provider grew 5% on a normalized basis. Enterprise growth was driven by strong demand from large global accounts prioritizing network modernization across Campus & Branch and data center switching. Networking operating margin of 22% was in line with guidance, reflecting disciplined execution and the early realization of Juniper synergies, partially offset by higher variable compensation. Moving to Cloud & AI. We delivered fiscal Q3 revenue of $9 billion, up 25%, exceeding our outlook, reflecting strength in traditional servers as higher average selling prices drove server revenue to an all-time high. Our disciplined pricing and increased scale drove operating profit above $1.5 billion. We were pleased to see operating profit growth accelerate, up 61% sequentially and triple digits year-over-year. Operating margin of 17% was up 460 basis points sequentially, demonstrating our ability to scale our business profitably. Server revenue growth of 35% accelerated sequentially as strong ASP growth in traditional servers offset supply-constrained unit volumes. Orders increased strong double digits year-over-year, reflecting robust demand from large enterprise, sovereign and cloud providers. Our supplier agreements now multiyear, in some cases, ensure us the capacity allocations we need to reduce lead times, improve our backlog conversion and drive higher new order growth, supported by our historically highest level of purchase commitments. We see enterprises increasingly moving from AI pilots to production deployments using traditional servers for agentic AI workloads and inferencing. Examples include a global financial services firm, leveraging AI for market analytics and trading insights and a large retail customer deploying on-prem agentic AI workloads to lower public cloud AI token costs. As evidence of this strong growth, we are pleased to report that after quarter end, HPE was awarded a multibillion-dollar server deal with a hyperscaler customer specifically designed for inferencing, supporting our view that demand for inferencing and agentic AI workloads is building. AI systems orders of $2.4 billion increased over 30% sequentially, reflecting broad-based demand across customer segments. Enterprise demand more than doubled, reflecting increasing overall infrastructure spending as AI initiatives have become Board-level priorities. Our AI Systems backlog increased 14% sequentially to a new high, and our pipeline remains multiples of our backlog. AI Systems revenue for the quarter was almost $1.6 billion. We expect AI Systems revenue to improve sequentially in Q4 given timing of backlog conversion. Storage revenue increased 10%, driven by strong order growth with higher ASPs and a favorable mix shift towards higher-value owned IP and private cloud. PCAI orders increased triple digits in Q3 as customers are adopting our AI factory platform to support agentic AI and inferencing initiatives. Alletra MP orders and revenue increased strong double digits year-over-year. We see robust growth potential for our X10000 object and file system, broadening our AI solutions portfolio to address the rapidly expanding unstructured data market. And finally, Financial Service revenue was roughly flat year-over-year, and the business continued to generate a return on equity exceeding 20%. Turning to our integration and transformation initiatives. We are making strong progress in building a more efficient company as we are running ahead of plan on multiple projects to lower our cost of sales and operating expenses. Juniper synergies capture remains on track to achieve our $600 million annual run rate savings target by the end of FY '28, with integration costs tracking better than planned. Last quarter, we highlighted the growing contribution of AI-enabled process simplification within Catalyst. Since then, we have expanded both our AI and operational simplification efforts across the enterprise. HPE is now deploying an internal agentic AI platform built on our own private cloud AI, open source and open-weight models, leveraging intelligent routing that sends each workload request to the most cost-effective AI model. According to our own internal analysis, our PCAI offering can reduce token costs versus the public cloud by up to 60%. Routine tasks stay on-premise while frontier models are reserved for the most complex work. Moving to cash. We delivered operating cash flow of $1.6 billion. Free cash flow totaled $958 million in Q3. As a result, we are raising our free cash flow target to at least $3.75 billion for FY '26. Our cash conversion cycle improved by 1 day from Q2, driven primarily by a decrease in days receivable due to more favorable billings linearity within the quarter, along with stronger collections. This was offset by an increase in days of inventory due to higher purchases in anticipation of future shipments. Inventory ended the quarter at $11.8 billion, up year-over-year and sequentially, reflecting higher commodity costs and targeted purchases to support increased orders and increased backlog. In Q3, we returned $324 million to common shareholders, including $189 million in common dividends and $135 million via share repurchases. We received gross proceeds of approximately $1.4 billion after closing our H3C transactions and used cash on hand to retire our term loan. Consequently, we exited Q3 with a net leverage ratio of 1.8x, below our target of 2x. We completed the sale of our Telco Solutions business last month and intend to retire $1.25 billion of notes maturing later this month. We plan to return at least 75% of our free cash flow to shareholders in Q4. Turning to guidance. We are increasing our outlook on the strength of our Q3 results and confidence in the durability in demand. We expect Q4 revenue to be between $13.9 billion and $14.8 billion, reflecting continued strong demand across both segments. We expect networking revenue to grow 11% to 13%, driven by order strength and improved supply chain conversion. We expect networking operating margin to improve modestly quarter-over-quarter driven by top line growth and Juniper synergies. In Cloud & AI, we expect revenue to grow 60% to 72%, reflecting sustained demand, higher ASPs in traditional servers and greater AI revenue conversion. We expect operating margin to moderate sequentially to a mid-teens rate. We expect Q4 total operating expenses to decrease sequentially by a low single digit due to lower variable compensation expense and increased Catalyst transformation efficiencies and Juniper synergy capture. We expect our operating margin rate to decline sequentially driven primarily by a higher mix of AI systems in Cloud & AI and pricing. As a result, we expect EPS between $1.20 and $1.30, a GAAP EPS between $1.12 and $1.22. Based on our Q3 results and Q4 outlook, we are raising our FY '26 EPS guidance range to $3.75 to $3.85. We are also raising our GAAP EPS range to $2.93 to $3.03. We now expect FY '26 free cash flow of at least $3.75 billion. Given the demand strength and sizable backlog we saw at the end of Q3, combined with some large deals we signed post quarter close, we are updating our fiscal '27 framework and now expect consolidated revenues to grow 13% to 17%. Networking revenue growth of 14% to 17%. Cloud & AI revenue growth of 14% to 18%. Company operating profit growth of 14% to 18%. Company operating margin of 14% to 15%, supported by a modest decline in operating expense. Networking operating margin in the mid- to high 20% range. Cloud & AI operating margin of approximately 13%. EPS of $4.40 to $4.60, which implies growth of 16% to 20% versus the midpoint of our FY '26 EPS outlook and free cash flow of at least $5 billion. Importantly, this framework builds on our higher FY '26 guidance, pointing to a significant improvement in our fiscal 2027 outlook. In closing, Q3 was an exceptional quarter for HPE. We generated strong financial results, raised our fiscal '26 and fiscal '27 commitments and achieved our leverage target more than a year ahead of our original plan. Demand remains ahead of revenue, and our backlog is a record, and our Juniper integration and Catalyst initiatives are delivering ahead of our FY '26 plan. As we head into the final quarter of fiscal '26 and look ahead to fiscal '27, we are executing from a position of strength, with durable demand, strong margins and the operational discipline to sustain both. With that, I'll turn the call back to the operator to begin Q&A. Operator: [Operator Instructions] And our first question for today will come from Katherine Murphy with Goldman Sachs. [Operator Instructions] Katherine Campagna: It was encouraging to see the momentum across the total portfolio, the record orders that you mentioned in the quarter as well as the raised fiscal '27 outlook for 13% to 17% growth. First, can you talk about what's giving you confidence that the current demand represents a sustained infrastructure cycle rather than customers pulling forward spend? And then as a follow-up, can you quantify how much of the raised fiscal '27 outlook is related to the new hyperscale inference and Oracle deal that you highlighted versus improved outlook within the remaining business. Antonio Neri: Well, thanks, Kathy, and good afternoon. Our guide is informed by what we see in the market, and the market is telling us the demand continues to be exceptionally strong. So there continues to be large build-out for AI cloud. And obviously, we participate in that in a very disciplined approach. Although networking, we continue to see significant demand for our routers and data center switches, which you saw we had record-breaking orders of $700 million this particular quarter, and we expect that to end between $2.5 billion and $3 billion for the year. And when I think about 2027, in our guide, we have not included the AMD Helios opportunity at all, which is going to start ramping sometime end of this calendar year and 2027. So demand is exceptionally strong. And then on the Cloud & AI what gives us the confidence is the acceleration in the enterprise. The enterprise clearly has hit an inflection point. And that inflection point is driven by the deployment of agentic AI and AI inferencing. And what we see that is because the number of use cases. And we see that ourselves. Just to give a perspective, we have more than 1,200 use cases in our company, 300-plus in production. And we continue to learn how to do that and accelerate the pace. We see that now in the broader enterprise market across multiple verticals. And the reality, that's going to favor our traditional server and storage business in our private cloud stack because they don't need huge amount of GPUs or even CPUs for that matter. What they need is a very tight capital infrastructure that ultimately brokers the cost of tokens that ultimately allows them to do what they need to do. So the number of tokens on-premise is growing very, very rapidly. So that's what informs us on the durability of this demand. And we see that in our pipeline, because ultimately, you guide yourself about the pipeline and how much of the pipeline you could convert first in orders and eventually through revenue. So that's what gives us the confidence to provide the guide that we guided for 2027. Marie? Marie Myers: I think, yes. So just in terms of the guide itself, as you know, we guided to 13% to 17% of revenue for the total company. In terms of networking, the Oracle deal plus the core, the beginning of the Oracle deal is in the 14% to 17% that we guided for the networking growth. And in terms of the hyperscaler deal, some of that as well is included in the Cloud & AI, which we guided to 14% to 18%. So that's how you should be thinking about the revenue. Once again, there's puts and takes in all. There is more AI revenue in Cloud & AI as well as you get into '27, so just bear that in mind. Operator: The next question will come from Amit Daryanani with Evercore. Amit Daryanani: Congrats on some fairly impressive numbers over here. Antonio, I wanted to just ask on networking though. The organic growth of 10% looks a little light relative to what I think your peers are seeing right now, I think, relative to what you perhaps expected. But your orders are up 36% is really strong. Maybe just talk about what's driving the gap over here? And how should revenues begin to catch up in orders? If you just spend a little bit of time on that, that would be helpful. And then I didn't hear you folks talk about the Oracle announcement a lot. Maybe just help us appreciate what are you providing them? Is it scale-out, scale-across? Just provide a little bit more color on that deal because it seems like a fairly important thing on the networking side, at least. Antonio Neri: Sure, Amit. The order momentum is super strong. In fact, as we said in our prepared remarks, our orders are growing 3.5x faster than the revenue. And so what it has limited us is the availability of supply. And we expect that supply to become more aligned to our order bookings as we go forward. Starting Q4, where you can see we're going to grow on the revenue side from 10% in Q3 to 11% to 13% in Q4 and then eventually to 14% to 17% in the full 2027 year. And so that's our focus is really on that supply availability. That's why Marie said that we have doubled the number of commitments in terms of inventory. And we are working with our suppliers through that. And the reality is that we will see continued orders ahead of revenues, but we expect that to kind of close a little bit as we go forward. So we don't -- we expect an acceleration of revenue as we go forward, but supply will continue to be the constraint. Now within that, Marie talked about core. So core for us is the Campus & Branch, which always has represented more than 50%. This quarter was probably 50% of it. And that had double-digit order growth, low double-digit order growth, but we posted record revenue, and we expect that to continue to improve as we go forward because we have a terrific value proposition with our self-driving networks and the versatility of both Mist and Aruba Central platform. And then on the Oracle side of the equation, it's an expansion of what Juniper used to do. But now we are doing at gigawatt scale and it's going to be a very set number of deployments on a global basis, and they're going to use both our QFX switching products, which is based on the Broadcom Tomahawk 6 and our software and our AI Ops. So think about that as a scale-out. And then our scale-across, which is our PTX routing platform, which uses our own silicon, which is a major differentiation for scalability, which is our Express 5 silicon, which we designed now a couple of years ago. So on a combined basis, this is a multi-gigawatt on a multiyear basis. Operator: Your next question will come from Aaron Rakers with Wells Fargo. Aaron Rakers: Congratulations on the strong results. On the traditional server side, I guess the question I have is, I think you talked about a lot of the growth being driven by the ability to pass through pricing relative to unit growth. So I guess my question is, as we think about AI moving into the enterprise environments more prolifically, how would you characterize the installed base and the upgrade opportunity that you're seeing associated with that? And should we start to think about unit growth accelerating on top of the ASP pass-through? And then secondarily to that, the hyperscale deal, I think in the past, HPE has been pretty clear of you'll be opportunistic on AI opportunities and maybe some of the larger hyperscalers. Has this changed strategically at all? Are you going after some additional hyperscale deals more actively going forward? Antonio Neri: Thank you, Aaron. Maybe I'll start with the latter because it's a very important use case. It is a hyperscaler customer, but think about them as an enterprise customer who is going to use our AI inferencing for their own internal usage. So our strategy has not changed from selling large amount of infrastructure for them to serve like it used to be in the past, the cloud business. This is about a multibillion-dollar AI inferencing for their own internal usage as an enterprise customer. It just happened to be they are labeled as a hyperscaler customer, okay? And so that's one takeaway. Second is that, look, units will modulate as supply becomes available, right? And so we -- as Marie said in her prepared remarks, we were obviously -- we are still, like everyone else, working through the supply availability. But what we are very excited about is that the acceleration of traditional servers and storage, by the way, in private cloud because some customers go server-only, some go with servers attached to -- storage attached to servers and some are using the full stack like a private cloud AI, which in many ways, the AI factory that we co-engineered with NVIDIA. And in that case, right, it's about the growing of the AI deployment on-premise. And so over time, right, it's going to become how large does the deployments come. And ultimately, whether you are server-only or you go private cloud, that will drive units, but it also would come down to the conversion of the units based on the supply availability as we navigate 2027. But right now, as we said, right, we expect continued exceptional demand into Q4 and 2027. Operator: Your next question will come from Joseph Cardoso with JPMorgan. Joseph Cardoso: Congrats as well. Maybe if I could, I think, Antonio, you mentioned that you're not embedding the Helios opportunity into the fiscal '27 outlook. Can you just touch on the rationale behind that decision and what's keeping you on the sidelines from introducing that into the framework. And any thoughts on how we should think about the magnitude of upside that you could introduce to the networking revenue and margin outlook when and if that gets introduced into the framework? Antonio Neri: Yes. No, thank you for the question. Well, I mean, we are working very closely with our partner, AMD. And we expect that infrastructure to be available for ordering later in this calendar year, and we're working together on a very large pipeline, which obviously this infrastructure is designed for large AI deployment at scale, particularly for training and then obviously, it can be used as well for inferencing. But these are a concentrated number of customers in the end that need that level of infrastructure, not different they're using today with NVIDIA NVLs, 72 and 144 of Vera Rubin. We felt that we wanted to see a little bit more as the schedule firm up and then eventually start deploying these capabilities. And then as we go through the subsequent quarters, we're going to share more about how that's happening. But the opportunity is pretty massive. When you look at the size of that deployment, it can be as a market, okay, not HPE, tens of billions of dollars, okay? Tens of billions of dollars. The difference this time is that, for us, the scale-up tray switches are HPE Juniper. And let me be clear, we are going to sell HPE Juniper scale-up switches beyond just embedded in HPE Helios rack. So we can sell it to anyone for that matter because obviously, customers will want sometimes different compute vendors, which is totally fine. But that opportunity is in the margins of the tray switch and the opportunity to sort of broadly beyond the HPE as a partner with AMD as we go forward. So once we see a little bit more of that, Marie now will share more. But this is not in the 14% to 17% growth that we just shared with you as a part of networking only. Marie Myers: And I would just add that once we get to the end of Q4, we'll give a fulsome guide for '27 as well. Antonio Neri: Yes. Operator: The next question will come from Wamsi Mohan with Bank of America. Wamsi Mohan: I was wondering if you could share any more details around your $3.5 billion inferencing deal that you signed. What exactly is part of that? And can you talk a little bit about the economics around this? And are you changing your approach to incremental hyperscale opportunities? Antonio Neri: Yes. So obviously, we can't talk about the customer, but it's a hyperscaler customer, but is acting, as I said to Aaron, as an enterprise. We are not selling, Wamsi, what used to refer as a Tier 1 infrastructure. You recall that during the cloud days, we are not selling that type of infrastructure. We are selling traditional servers for AI inferencing that they will use for their own internal usage. Operator: The next question will come from Asiya Merchant with Citi. Asiya Merchant: Can you tick down a little bit on supply constraints? Where do you see them most acute right now? And kind of your expectations on the supply constraints easing or how you're thinking about your agreements, long-term agreements that you've signed to source the supply? Antonio Neri: Yes. Thank you for the question. The supply constraints, generally speaking, continue to be the same, right? So obviously, on the commodity side, DDR5 is a great example of it. DDR4 for the older generation, NAND in the flash drive space. Those have been consistent themes now for 3 quarters since the beginning of 2026. And then there is another set of parts underneath that they are constrained by wafer capacity. And so we expect that to continue to be the case because ultimately, you have to solve two problems. One is clean room capacity to turn wafer into more available supply that going to -- that should improve some in 2027 because we know our partners continue to invest in clean room capacity, but ultimately, structurally, this will be solved with wafer capacity. Because in the end, you need the wafers to turn parts into actual supply of products. And so that's the challenge we're all navigating through. And the wafer capacity affects other parts, right? But in the memory space, you also have another trend underneath that obviously is driven by the technology shift. We had DDR4 to DDR5, that's understood, but then you have traditional DRAM moving to HBM. And that HBM demand is super high because it's driven by the GPU and the better memory that comes with it. So this is why you have to look at this wafer capacity, clean room capacity and then eventually the mix of what type of memory will be used and demanded as we go forward. Now in the traditional server, we use DRAM. We don't use HBMs. And so that's where we are focused very extensively. Once you buy a rack scale architecture, you come with HBMs and therefore, once you get that server tray with the GPUs, the memory comes with it. So this is what we need to navigate through, but my expectation personally after seeing the exceptional demand that we see in the market and talking with our suppliers, some of them we signed already multiyear LTA agreements to lock our capacity. We decide how to use that capacity. Then it tells me this is going to last for a longer period of time, which obviously will have consequences on cost and pricing. But so far, I think HPE has been very effective in managing that process. Operator: The next question will come from Erik Woodring with Morgan Stanley. Erik Woodring: Congrats on the nice quarter here. Marie, in your prepared remarks on -- you mentioned gross margins, and you mentioned a normalization in traditional server margins, I think, looking forward. Can you maybe just elaborate a bit on what that means? Like why would you see normalization in server margins if demand is as strong as you're referencing and your unit trajectory should seemingly improve as you get better supply? Like is this -- have you benefited from low-cost inventory now that's starting to uptick in your bill of materials? I'm just trying to understand your comment and exactly what you're trying to message there. Marie Myers: Yes. No worries, Erik. So maybe I'll just start up by giving you some context on the quarter, what drove those margins and then how we think about them going into Q4 and into '27. So I would think about Q3 more as a confluence of everything coming together at once. Obviously, you saw the impact of strong revenue scale, and that played through in terms of leverage, higher gross margins. We talked about our disciplined pricing. You heard Antonio talk about how we've been very diligent around pricing in this constrained component environment. Don't forget we've also got the benefits of programs like Catalyst that have been flowing through as a put and take. And then there was a mix of deals in the quarter that also impacted and really frankly benefited us in terms of our Q3 rates on what I'd say with respect to servers. As you get forward and you look forward into Q4 and then this does carry forward into the guide that we gave into '27, bear in mind that the mix of deals, specifically in AI will ship. So we do expect to ship more AI revenue, specifically in Q4, and you can see that in our inventory number, inventory number went up. So we're positioning ourselves to ship some larger AI transactions, and we expect to have a bigger mix of that also into '27. And then to just double down, it's actually the mix of deals even inside of traditional server will also moderate as we go into Q4 and into '27. So that's how I'd be thinking about the margins. Obviously, we're pleased with the guide that we've given, but I think at this point, we had a great quarter in terms of a confluence of all the factors coming together. Operator: The next question will come from Tim Long with Barclays. Timothy Long: A two-parter, if I could, on AI networking side. First, nice win with Oracle. As you mentioned, it had been a pretty big Juniper customer. So just curious if that win can propel any other -- be used as a reference design or reference case for other either hyperscalers or neo-clouds, there's obviously a lot of new networking opportunities out there. So I'm curious if you think that larger, more profile AI win can do that? And second, Antonio, you mentioned the scale across with the custom silicon. I'm curious what you guys are hearing on the importance of having that customer silicon. Do you think that was important for the win? And similarly, is that something that can help drive even more scale across as that's becoming more important for the AI companies? Antonio Neri: Yes, Tim, thank you. The answer is yes and yes. I mean, yes, because obviously, it proves on the first part of your question, that we have a scalable set of products that deliver the performance with the AI capabilities that now everybody is looking for to drive these self-driving kind of operations. And we have embedded that across the entire portfolio, not just in the Campus & Branch, but also if you look at our routers are amazing what they can do in optimizing the bandwidth using AI. But also, we were first time to market with a 1.6-terabit. And time to market here is a very important aspect of competing and winning in the market. So Rami and I spent a lot of time with the team how we continue to stay ahead of the curve and be first time to market with these latest technologies. So we were definitely first time to market, Juniper was, with a 1.6 terabit in air cooled. And we were the first 1.6 time to market with the direct liquid cooling. And then on the route -- and so we hope that's going to drive a significant amount of interest, and we have a lot of conversations with customers, right, to leverage this portfolio. On the routing side, look, it's very hard to do what our silicon does. There's only 2, 3 players who have done this at massive scale. And it's a source of differentiation. What our Express silicon does for the routing is unique. And if you think about the PTX, I'll give this example, right, perhaps not in the AI space. But if you take the latest PTX product, which is 3/4 of a rack and you take New York and London, all 60 million people watching a Netflix movie concurrently on the platform, the platform can manage it. Think about the scale, right, that these products can do. And that's very hard to do. So that's why as these gigawatts and gigawatts of infrastructure gets deployed, which we think by the end of the decade will be over 270 gigawatts, you have to connect all of them. And therefore, you need a -- at the end of that pipe, you need a router with that level of capabilities. Operator: The next question will come from David Vogt with UBS. David Vogt: Maybe a combo for Antonio and Marie. So I think Antonio, if I think about your '27 outlook, you're taking the revenue up by about $4 billion relative to where we were 90 days ago. Can you kind of dig in on the supply chain? I know you talked a little bit about it before, but what improved on the margin? Was it just securing more purchase commitments? What gives you more confidence that you have enough supply chain relative to 90 days ago to kind of hit that target? And then Marie, for you, same kind of question. You're taking that number up by about $4 billion, and it looks like the free cash flow drop through is pretty impressive, incrementally $500 million flows through at least, which is better than your current conversion on the business. Can you help us understand kind of what's going on with the free cash flow conversion from the guidance raise? Antonio Neri: So yes, the first part of your question, the answer is yes because obviously, we put numbers out there if we have the ability to fulfill it, and that came through the work our supply chain team have done to secure these multiyear long-term agreements that locks the capacity. And obviously, every 90 days, we can actually adjust what type of usage in that capacity within that capacity, we want to get out of it. And so your math is absolutely in the range, and that's why we are confident in this guide. Because at one end, you have the demand for it, and on the other end, you have the supply to fulfill it. And that's why this is a durable profitable growth. And on the cash flow, Marie? Marie Myers: Yes. No, look, first of all, I will say, look, really pleased with the guide we gave of at least $5 billion, which is up 33% year-on-year. And as you correctly pointed out, one of the biggest drivers of that improvement in the rate is really the fact that we've got a lot less restructuring as we go into '27. Just remember that the programs that we had like Catalyst and the Juniper synergy programs, really we had the sort of, I'd say, the brunt of the restructuring in this year in '26. So as we get into '27, we start to bleed that down, and it will be a bit of a tail left on the Juniper synergy plan, which will honestly bleed off by the sort of end of Q4 of next year. Antonio Neri: I think the other thing, Marie, that's important to understand is that as we accelerate the growth in networking, which obviously 14% to 17% is an acceleration compared to 2026. The working capital demand in networking is significantly lower because it's a faster turn to revenue once you get the inventory on hand. Operator: The next question will come from Mark Newman with Bernstein. Mark Newman: Digging a bit more into the server side. You reported server revenue up 35% year-on-year. Obviously, you've got some AI servers in there. So I think if you take that out, it implies that traditional servers growing a bit faster than that number. Just wondered if you could -- and you said orders for traditional servers up 75% year-over-year. I wondered if you could clarify for us like how much of this growth is higher ASPs and richer configurations, which you mentioned on Slide 8 versus unit growth. Is there any significant unit growth in terms of units of CPU cores or any kind of metric like that? Or is this exclusively pricing and configuration? And related to that, the orders being stronger growth than the revenue, can we ascertain from that you're significantly supply constrained and should we -- how long would that supply constraint last? I'm just wondering in terms of projecting out like should we see further acceleration of server growth from here as supply constraint alleviates? Or is that supply constraint going to remain at similar levels going forward? Antonio Neri: Yes, you put a lot in that question, but I'm going to simplify it for you a little bit. Look, we expect in Q4 units to strengthen because of what we see in the market. And obviously, in 2026, the units have been constrained by the supply availability, which means a lot of the growth came through the ASPs, but as we go into Q4, we expect units to strengthen. And a lot of that will be on the back of the AI inferencing and agentic AI that we see. Supply will continue to be constrained, which means we're going to continue to run into high backlog as we go forward. But to the question that was asked earlier on, we factored that in, in our guide because our guide reflects what we believe the supply availability against the backlog and the demand will be. So I will stay focused on the guide. I will stay focused on the fact that supply will continue to stay constrained, but the demand will continue to be exceptionally high. And so we expect the Cloud & AI segment to grow 14% to 18% on revenue. And that's a very strong growth, and it will continue to be led by traditional servers, higher conversion on AI systems as we go forward, particularly in Q4. And then ultimately, the storage business because, obviously, the storage business helps on the profitability side because of the margin structure. But look, as we said in our remarks, storage grew twice as fast as the revenue that we posted in the quarter. Marie Myers: Yes. And I'll just add, Mark, that we actually -- it was a raise on Cloud & AI revenue actually for '27 to get to the 14% to 18%. So I think that just illustrates the strength of the demand that we're seeing out there. Shannon Cross: Operator, we'll take our final question. Operator: Our final question will come from Matt Niknam with Truist. Matthew Niknam: I'll echo the congrats on the great results. Maybe more of a high-level question. I'm wondering, Antonio, if you're seeing any incremental hesitation or pushback from customers with regards to demand appetite, just in light of some of the bigger pricing actions aimed at offsetting higher memory costs. And maybe on a related note, if you can speak to where incremental budget to invest in IT infrastructure and HPE products are coming from at some of your larger customers? Antonio Neri: Sure. No, we don't see hesitation. I will say at the beginning of this hyper cycle on the cost, obviously, they were a little bit, I mean, shocked, and they're trying to navigate through the timing by focusing on understanding the trends and looking at the spot market and the like. Once they understood that, they understood that, particularly in AI, you need to go faster. They figured it out, look, waiting is not an option, but they are getting smarter about where to land their budgets, and how to optimize for these token economics, which Marie talked about. Look, when you do it on-premise, and we do that ourselves and we share the number, we can see up to 60% cost benefits on a token basis. And so no, I don't see hesitation on this point in time, and that's why demand continued to be exceptionally strong. That's very clear. In terms of budget, look, budgets overall are going up. Look, in our case, Marie can talk about it. Of course, there is prioritization within the budget to replace that older infrastructure, to invest more in AI. It's a balanced approach. But in our case, we are growing the budget to consume more tokens because we are very aggressive in deploying AI as a part of the Catalyst transformation. Obviously, we do it with governance, rigor, return on invested capital and all the things. But in the end, it's an add-on, okay? It's not the subtraction of something else. So I was talking to a large customer yesterday, which is in the financial sector. And he told me, yes, we are going all in, and now we have done the math, and we believe it will be better suited for us to build an AI factory on-premise so that we can improve the agility of deploying AI with the cost and controls, particularly in financial services with the compliance, right, that regulates that vertical. So we see that momentum continue. And I believe 2027 is going to be even stronger for enterprise because they become more confident in what they are doing and one win takes -- leads to another win, right, on how this has been successful. Because in the end, it's business process transformation, it's workflow transformation. It's not just technology for the sake of technology. Shannon Cross: Antonio, would you like to... Antonio Neri: Yes. No. Thank you for your time. I know you have a lot of earnings to cover. I will remind you of the Networking Investor Day, please attend if you can. We're going to share with Rami, our view of the future. Clearly, super-excited about the Juniper acquisition. It has been a huge success. And we're just at the beginning. You saw some of the wins that we just announced. The runway ahead of us is enormous, whether it's new wins to Tim's question early on or with further customers or the Helios opportunity. The fact that everybody was concerned about integration, this was executed very thoughtfully. And the fact we're growing 3.5x faster than revenue shows you that we have the right portfolio at the right time with the right talent. And then in the Cloud & AI, I think we are delivering operating leverage. I mean, the execution there has been excellent. But our strategy is very intentional. We are leading with networking. We are at the core becoming a networking company. And the rest of the portfolio is there to serve the customer needs by driving the profitability and ultimately generating more cash, which has been a huge success so far, and it will be a bigger success in 2027. So thank you for your time today. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Before you buy stock in Hewlett Packard Enterprise, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Hewlett Packard Enterprise wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $414,015!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,385,459!* Now, it’s worth noting Stock Advisor’s total average return is 960% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of September 9, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Hewlett Packard Enterprise. The Motley Fool has a disclosure policy. HPE (HPE) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in SPDR S&P 500 ETF Trust? Here are five stocks we like better. Q3 earnings season, starting in October, is expected to again beat a lowball consensus of 28.5% growth after Q1 and Q2 results far exceeded estimates. Energy and technology sectors, fueled by high oil prices and AI-related spending from companies like NVIDIA and AMD, are driving much of the earnings outperformance. Analysts may be underestimating 2027 earnings growth, with the S&P 500 potentially advancing to 8,500 or higher, though falling oil prices pose a key risk. Q3 earnings reporting, which kicks off in October, looks set to be another solid season for the market. While factors including geopolitics, oil, inflation, and the FOMC point to volatility, earnings trends and seasonal trends suggest a robust rally will follow. Seasonally, Q4 is typically the strongest of the year, often starting off slow and then ending with a bang, usually capped off by a Santa Claus Rally. This year, the stage is set for significant outperformance and an affirmation of next year’s results that may lead to a substantial market reset. → 3 Under-the-Radar Defense Stocks With Record Backlogs The S&P 500 historically outperforms its consensus estimates, but outperformance tends to run in the low-single-digit range. Today's narrative is that Q1 and Q2 results were so far above consensus that they revealed a major market disconnect. Q1 results outperformed consensus by 1,750 bps versus the low set just ahead of peak season, topping out at just over 28.5% average earnings per share (EPS) growth, while Q2 results reflected acceleration, outperforming by 2,750 bps from the low to the high and peaking above 47%. With this in play, the Q3 consensus of 28.5% growth is a lowball estimate, likely to be surpassed and compounded by healthy guidance. → Ride-Share Reckoning: Tesla Drives Into Uber's Lane Oil has been a primary driver of outperformance. High oil prices are juicing energy company profits at all levels, with high prices aiding upstream operations and wide crack spreads and demand aiding downstream ops. The critical takeaway is that the energy sector, which grew EPS by 146% in Q2 and outperformed by 2,400 bps, is expected to remain strong in Q3 and potentially into Q4 and Q1 2027, underpinning market strength. The forecast for energy sector earnings growth is just over 100% for Q3. As robust as the energy outlook is, AI is what's driving the S&P 500 today. The information technology sector's earnings were the second-fastest-growing in Q2. NVIDIA (NASDAQ: NVDA) underpinned the gains, along with a broad group of infrastructure companies and a widening group of software companies successfully monetizing the technology. The Q3 forecast is for another 62% growth; the revision trend is positive, and outperformance is likely to be substantial. → High Gas Prices Aren't Budging—Here Are 3 Stocks That Benefit While NVIDIA is the primary driver, Advanced Micro Devices (NASDAQ: AMD) is unleashing another wave of GPU capacity. The MI450/Helios launch is expected to show strongly in Q3 results, including for AMD's ecosystem partners. Early signs, including from Hewlett Packard International (NYSE: HPE) (the primary source for Helios racks), show strength and momentum, with 42% new-order growth, backlog at record levels, and a pipeline suggesting exponential strength in upcoming quarters. Software could come back into the spotlight in a good way. Q2 results from names such as Salesforce (NASDAQ: CRM), Snowflake (NASDAQ: SNOW), and a host of cybersecurity companies showed how misplaced the SaaS-pocalypse fears were. Salesforce, for one, reported explosive growth in its AI offerings, with clients flocking to its platform rather than abandoning it. Key details include its data moat, data-handling capacity, and agentic automation. Profits, cash flow, and capital return also help. Seasonal factors suggest the market will continue moving sideways, potentially correcting ahead of the upcoming earnings season. JPMorgan (NYSE: JPM) kicks off the peak season with a mid-October report, but momentum may not build until early November, after big tech begins reporting and Election Day results are in. As it stands, community-based pushback against AI data centers is growing and delaying the buildout. Elections may come down to which candidates support data centers, although the build is likely to continue regardless of the outcome. The major hurdles are land, power, and water, with power and water more easily overcome. Companies such as Bloom Energy (NYSE: BE) and AirJoule (NASDAQ: AIRJ) provide hurdle-sidestepping technologies, and Bloom Energy, at least, is in high demand. AirJoule is waiting on UL product certification, which is anticipated soon. Another trigger for stock price action will be long-term forecasts and hints as to what 2027 will produce. Forecasts suggest another solid year but may be underestimating growth by a wide margin. Assuming the trends from the first half of the year remain in place, Q3 and Q4 will be strong, setting the stage for a solid first half of 2027, which analysts are not forecasting. Consensus as of early September suggests a good start, with Q1 2027 earnings expected to grow by nearly 18%, but a quick slowdown to nearly flat in Q2. In this scenario, the market is on track for at least four more quarters of S&P 500 earnings growth, outperformance, and upward revisions to drive stock price action. With this in play, the index is likely to trend higher and could easily advance to 8,500 or higher by early 2027. The biggest risk is the impact of oil prices on the earnings outlook—WTI is expected to revert to the $60 range sometime in 2027, which would cause a sharp slowdown in average growth. The article "Q3 Earnings Could Be the Catalyst the Market Has Been Waiting For" was originally published by MarketBeat. View MarketBeat's top stocks for September 2026.

Hewlett Packard Enterprise (NYSE:HPE), an enterprise server, networking, storage, and AI infrastructure provider, closed at $54.44, up 5.03%. Investors focused on supply bottlenecks after a strong earnings beat and raised guidance, while watching AI server demand and the next earnings call. Trading volume reached 68.4M shares, coming in about 208% above its three-month average of 22.2M shares. Hewlett Packard Enterprise IPO'd in 2015 and has grown 466% since going public. The S&P 500 (SNPINDEX:^GSPC) rose 1.07% to 7,748, and the Nasdaq Composite (NASDAQINDEX:^IXIC) gained 1.40% to 26,584. Among enterprise hardware, networking, storage, and hybrid cloud infrastructure peers, Dell Technologies (NYSE:DELL) closed at $515.94, up 4.82%, while Cisco Systems (NASDAQ:CSCO) closed at $108.61, down 0.78%, showing mixed trading in AI infrastructure names. If investors are worried that the AI boom might be short-lived, HPE's Q2 results show it may not stall anytime soon. HPE soared past analysts' expectations, with sales and adjusted earnings per share rising 34% and 66%. The company also raised 2026 and 2027 sales growth guidance to between 34% and 37%, and 13% and 17%, respectively. HPE's networking unit stole the show, growing revenue by 75%, headlined by its data center networking unit up 112%, routing business soaring 270%, and security segment spiking 76%. Meanwhile, in the company's Cloud and AI unit, its server business rose 35% -- impressive growth for the company's largest business segment. Antonio Neri, president and CEO of HPE, explained, "AI is becoming a multi-year growth driver for HPE, and our differentiated portfolio positions us to capture that opportunity at scale." Trading at 14 times forward adjusted earnings, HPE could be a reasonably priced growth stock for investors who believe this growth reacceleration is here to stay for a few years or more. Before you buy stock in Hewlett Packard Enterprise, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Hewlett Packard Enterprise wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $446,157!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,377,357!* Now, it’s worth noting Stock Advisor’s total average return is 983% — a market-crushing outperformance compared to 212% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of September 3, 2026. Josh Kohn-Lindquist has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cisco Systems and Hewlett Packard Enterprise. The Motley Fool has a disclosure policy. Stock Market Today, Sept. 3: HPE Jumps 5%, Raises Fiscal Outlook on Record AI Server Demand was originally published by The Motley Fool

Morningstar lifted its price targets for both companies, citing stronger AI-driven growth and margin opportunities. Snowflake’s results highlighted accelerating enterprise AI demand, though Morningstar warned competition could intensify as agentic AI enthusiasm cools. HPE’s results showed AI spending broadening into servers, networking and hybrid cloud. Snowflake and Hewlett Packard Enterprise delivered strong quarterly reports, but investors reacted very differently, with Snowflake shares surging 24% premarket on Thursday while HPE stock fell about 5%. Morningstar analysts nonetheless raised their price targets for both companies, citing stronger AI-driven growth prospects. See what 10M+ investors are talking about. Get the Stocktwits Daily Rip for what retail is watching right now, free to your inbox Snowflake’s second-quarter revenue rose 35% to $1.55 billion, beating expectations, and the company raised its full-year revenue forecast. Morningstar raised its target on SNOW to $284 from $255, citing stronger AI tailwinds that should benefit both revenue growth and margins. However, the firm cautioned that the company’s recent outperformance is driven primarily by the broader enterprise AI market rather than a unique competitive advantage. “Shares shot up 23% after earnings and look overvalued to us,” Morningstar said, warning that competition could intensify as enthusiasm around agentic AI eventually fades. HPE, meanwhile, reported fiscal third-quarter revenue of $9.2 billion, up 34%, and also raised its annual forecast, following a similarly strong report by rival Dell Technologies earlier this week. Morningstar analysts said the results show AI demand is spreading beyond specialized AI infrastructure into HPE’s broader portfolio, including hybrid cloud, general-purpose servers, and networking. The firm also pointed to HPE’s recent Oracle deal combining Juniper networking products with other hardware for a multigigawatt buildout. Despite the stock’s selloff, Morningstar raised its HPE target to $66 from $64. “We thought earnings were solid and are a bit surprised by the after-hours selloff and view shares as undervalued,” the analysts said. On Stocktwits, the retail sentiment for SNOW increased to nearly the highest-possible in the ‘extremely bullish’ zone (97/100), and the sentiment for HPE also climbed sharply higher to ‘extremely bullish’ (92/100). “$HPE Now trading at a single digit P/E of 9 and change after that beat and raise. One of the best values right now in the AI hardware space with phenomenal management and consistent execution. I sure hopes it opens around this price tomorrow as I'll be opening some long dated bull call spreads,” a trader said. There was skepticism around SNOW. A trader wrote: “$SNOW Almost 25% in AH. This is just, i mean. wow. I don't really buy short positions. But im seriously considering it.” For updates and corrections, email newsroom[at]stocktwits[dot]com. Read Next: Micron, Samsung, SK Hynix Suffer Drop In DRAM Market Share As China’s CXMT Pulls Ahead Yuvraj Malik has no position in any of the stocks mentioned in this article. StockTwits' news team content is for informational purposes only and is not intended as investment advice. For more, see our editorial policy. This article was originally published on StockTwits. Related: TSLA Stock Slips Overnight As Safety Regulator Scrutinizes Cybercab — Retail Fumes Over Event Blackout TSLA Stock Slips Overnight As Safety Regulator Scrutinizes Cybercab — Retail Fumes Over Event Blackout LULU Stock Sinks 18% Overnight: Michael Burry Says Lululemon Is A ‘Trickster’ As He Vows To Buy More Under $100

Hewlett Packard Enterprise (HPE) reported $12.21 billion in revenue for the quarter ended July 2026, representing a year-over-year increase of 33.7%. EPS of $1.11 for the same period compares to $0.44 a year ago. The reported revenue represents a surprise of +0.99% over the Zacks Consensus Estimate of $12.09 billion. With the consensus EPS estimate being $0.95, the EPS surprise was +16.84%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Hewlett Packard Enterprise performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Net Revenue- Cloud & AI: $9.04 billion versus the five-analyst average estimate of $8.71 billion. Net Revenue- Networking: $2.89 billion compared to the $2.93 billion average estimate based on five analysts. Net Revenue- Cloud & AI- Financial Services: $883 million versus the four-analyst average estimate of $907.37 million. Net Revenue- Cloud & AI- Server: $6.77 billion versus $6.4 billion estimated by four analysts on average. Net Revenue- Corporate Investments and Other: $278 million versus $274.74 million estimated by four analysts on average. Net Revenue- Cloud & AI- Storage: $1.29 billion compared to the $1.22 billion average estimate based on three analysts. Net Revenue- Cloud & AI- Other: $102 million compared to the $163.63 million average estimate based on three analysts. Net Revenue- Networking- Routing: $788 million compared to the $824.23 million average estimate based on two analysts. Net Revenue- Networking- Data Center Networking: $382 million versus $440.02 million estimated by two analysts on average. Net Revenue- Networking- Campus & Branch: $1.44 billion versus the two-analyst average estimate of $1.45 billion. Net Revenue- Networking- Security: $281 million compared to the $288.83 million average estimate based on two analysts. Earnings Before Taxes- Networking: $637 million versus the two-analyst average estimate of $680.55 million. View all Key Company Metrics for Hewlett Packard Enterprise here>>> Shares of Hewlett Packard Enterprise have returned -2.9% over the past month versus the Zacks S&P 500 composite's +2% change. The stock currently has a Zacks Rank #2 (Buy), indicating that it could outperform the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Hewlett Packard Enterprise (NYSE:HPE) shares rose 4.7% to $53.28 in premarket trading on Wednesday ahead of the company’s fiscal third-quarter 2026 earnings report, scheduled for release after the market close. The stock had closed the previous session at $50.87. The move also followed recent analyst actions and quarterly results from Dell, another company with exposure to AI infrastructure. Major U.S. equity benchmarks were trading modestly lower in premarket trading, according to the supplied information. Deutsche Bank initiated coverage of Hewlett Packard Enterprise with a Buy rating and a $62 price target on September 1. Bank of America separately increased its price target on HPE to $82 from $80, citing the company’s position in AI infrastructure. The ratings and price targets represent the respective analysts’ assessments and are not established future share prices. Consensus estimates cited in the supplied information indicate that Hewlett Packard Enterprise is expected to report approximately 32% year-over-year revenue growth for the fiscal third quarter. Analysts also expect earnings per share to more than double compared with the corresponding period a year earlier. HPE has reported earnings per share above consensus estimates in each of its previous four quarters, with an average difference of approximately 16%, according to the supplied information. Previous results do not indicate whether the company will exceed expectations in its upcoming report. Hewlett Packard Enterprise’s AI server backlog stands at $6.3 billion, with approximately two-thirds associated with enterprise and sovereign deployments, according to the supplied information. The backlog provides an indication of contracted or expected demand but does not by itself determine the timing or amount of future revenue recognition. Broadcom is also scheduled to report results on Wednesday, placing additional investor attention on companies with exposure to AI infrastructure. Hewlett Packard Enterprise’s fiscal third-quarter report will provide an update on the company’s financial performance and its AI infrastructure operations. The 4.7% premarket increase comes ahead of those results and after recent analyst actions. However, the extent to which individual factors, including analyst ratings, expectations for the earnings report or results from other technology companies, contributed to the share-price move cannot be established from the supplied information. Hewlett Packard Enterprise stock price

Interested in Hewlett Packard Enterprise Company? Here are five stocks we like better. Record Q3 performance: HPE reported revenue of $12.2 billion, up 34% year over year, with a 40% non-GAAP gross margin, $1.11 in non-GAAP EPS and record third-quarter free cash flow of $958 million. AI demand is accelerating, but supply remains a constraint: Orders rose 42% and backlog reached a record level, while AI systems orders climbed more than 30% sequentially. Memory, NAND flash and other component shortages are limiting revenue conversion and are expected to persist into fiscal 2027. HPE raised its outlook: The company increased its fiscal 2026 EPS and free-cash-flow targets and now expects fiscal 2027 revenue growth of 13% to 17%, EPS of $4.40 to $4.60 and free cash flow of at least $5 billion, supported by networking, AI infrastructure, an Oracle collaboration and a new hyperscaler server deal. The Trade Desk’s Earnings Miss Raises a Bigger Question About Its AI Future Hewlett Packard Enterprise (NYSE:HPE) reported record fiscal 2026 third-quarter results, citing accelerating demand for AI infrastructure, continued networking momentum and disciplined pricing. The company also raised its fiscal 2026 outlook and updated its fiscal 2027 growth framework as orders outpaced revenue and backlog reached a record level. Revenue for the quarter totaled $12.2 billion, up 34% from a year earlier and above the high end of the company’s guidance range. HPE reported a record non-GAAP gross margin of 40%, non-GAAP operating profit of $2 billion and non-GAAP diluted earnings per share of $1.11. GAAP EPS was $1.06. → AST SpaceMobile Is Down 54%—Can FCC Progress and BlueBirds Reverse the Slide? AMD’s Helios Launch Could Create Winners Beyond AMD Stock Free cash flow reached $958 million, HPE’s highest third-quarter result, while operating cash flow was $1.6 billion. Chief Executive Officer Antonio Neri said the company exceeded its financial commitments across revenue, gross margin, operating profit and earnings per share. “AI has become a multi-year growth driver, expanding demand across our HPE portfolio,” Neri said. “Customer demand in the quarter accelerated across both business segments, with orders growing faster than revenues.” → Palo Alto’s Rally Has One Big Problem Ahead of Earnings 5 Tech Stocks Holding Their Ground Through the AI Trade Pullback HPE said normalized order growth was 42% year over year, led by demand for traditional servers, AI systems and networking products. The company said it booked more orders than in any prior quarter, producing a record backlog. However, management said supply constraints continue to limit its ability to convert demand into revenue. Neri cited constraints involving DDR5 and DDR4 memory, NAND flash and other components affected by wafer capacity. HPE is seeking to address the situation through increased purchase commitments, multiyear supplier agreements, alternative product configurations and closer demand planning with customers. → Securing AI: 5 Most-Upgraded Stocks From the Q2 Reporting Season Chief Financial Officer Marie Myers said inventory ended the quarter at $11.8 billion, reflecting higher commodity costs and targeted purchases intended to support rising orders and backlog. HPE’s cash conversion cycle improved by one day sequentially, helped by collections and billing timing, although higher inventory partially offset those gains. Management said supply availability should improve enough to support higher revenue conversion in the fourth quarter, while remaining a constraint into fiscal 2027. Networking revenue was $2.9 billion, up 10% on a normalized basis, while orders increased 36%. Myers said orders grew about 3.5 times faster than revenue, with supply constraints and shipment timing limiting data center networking revenue conversion. Networks for AI orders reached a quarterly record of $700 million and grew by triple digits. Cumulative networks-for-AI orders reached $2.2 billion, surpassing HPE’s previous fiscal 2026 target. The company raised its year-end target for cumulative networks-for-AI orders to between $2.5 billion and $3 billion. Within networking, campus and branch revenue grew 8% on a normalized basis, routing revenue rose 23%, and security revenue increased 12%. Data center networking revenue declined 6% because of supply-constrained shipment timing. Networking operating margin was 22%, in line with HPE’s guidance. HPE also announced an expanded collaboration with Oracle involving routers, switches, software and AI operations capabilities for Oracle’s AI cloud infrastructure build-out. Neri described the deployment as a multiyear, multi-gigawatt opportunity that includes QFX switching products and PTX routing products. The company said a U.S. federal court approved its settlement with the Department of Justice related to the Juniper Networks acquisition in August. Neri said integration and cost-synergy efforts remain ahead of schedule, while Myers reiterated HPE’s target of achieving a $600 million annual run-rate of Juniper-related savings by the end of fiscal 2028. Cloud and AI revenue totaled $9 billion, up 25%, exceeding HPE’s outlook. The segment generated operating profit of more than $1.5 billion and an operating margin of 17%, which increased 460 basis points sequentially. Server revenue rose 35%, driven by higher average selling prices in traditional servers, which offset supply-constrained unit volumes. Management said traditional server orders increased by a strong double-digit percentage year over year. HPE expects unit volumes to strengthen in the fourth quarter as supply becomes more available, though constraints are expected to persist. AI systems orders were $2.4 billion, up more than 30% sequentially, while AI systems revenue was nearly $1.6 billion. HPE expects AI systems revenue to improve sequentially in the fourth quarter as backlog converts to revenue. After the quarter ended, HPE said it received a multibillion-dollar server deal from a hyperscaler customer for internal AI inferencing usage. Neri emphasized that the transaction involves traditional servers for the customer’s own use rather than the type of cloud infrastructure deployments HPE had previously pursued with large hyperscalers. Storage revenue increased 10%, aided by demand for higher-value owned intellectual property and private cloud offerings. Private Cloud AI orders grew by triple digits, while Alletra Storage MP orders and revenue also increased by strong double-digit percentages, according to management. HPE GreenLake customers rose 18% year over year to 52,000. The company also said HPE Financial Services recorded third-quarter highs in financing volumes, residual value and return on equity as customers sought financing options for AI investments. For the fiscal fourth quarter, HPE expects revenue of $13.9 billion to $14.8 billion. It forecast networking revenue growth of 11% to 13% and cloud and AI revenue growth of 60% to 72%. The company expects non-GAAP EPS of $1.20 to $1.30 and GAAP EPS of $1.12 to $1.22. HPE raised its fiscal 2026 non-GAAP EPS outlook to $3.75 to $3.85 and its GAAP EPS outlook to $2.93 to $3.03. It also increased its fiscal-year free-cash-flow target to at least $3.75 billion. For fiscal 2027, HPE now expects consolidated revenue growth of 13% to 17%, networking growth of 14% to 17%, and cloud and AI growth of 14% to 18%. The company forecast EPS of $4.40 to $4.60 and free cash flow of at least $5 billion. Management said the fiscal 2027 framework includes some contribution from the Oracle collaboration and the recently announced hyperscaler inferencing deal. It does not include potential revenue from the AMD Helios opportunity, which HPE expects to become available for ordering later in the calendar year. HPE returned $324 million to common shareholders during the quarter through $189 million in dividends and $135 million in share repurchases. The company said it exited the quarter with net leverage of 1.8 times, below its target of two times, and plans to return at least 75% of free cash flow to shareholders in the fourth quarter. Hewlett Packard Enterprise (HPE) is an enterprise technology company that designs, develops and sells IT infrastructure, software and services for business and government customers. Its core offerings span servers, storage, networking, and related software, together with consulting, integration and support services aimed at modernizing and managing enterprise IT environments. HPE's product portfolio includes systems for traditional data centers as well as solutions for high-performance computing, edge computing and telecommunications infrastructure. A major focus for HPE is hybrid cloud and consumption-based IT. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Hewlett Packard Enterprise Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for September 2026.

HPE delivered $1.11 in Q3 earnings per share (EPS) and $12.2 billion in revenue, beating analyst estimates on both metrics. The company expects Q4 EPS of $1.20-$1.30 and revenue of $13.9 billion-$14.8 billion, both above consensus. Stocktwits traders remained bullish on HPE despite the stock falling after-hours following the strong results. Hewlett Packard Enterprise (HPE) reported a strong third quarter for fiscal 2026, beating estimates on both earnings and revenue and raising its outlook for the rest of fiscal 2026 and 2027. Despite the strong report and higher guidance, HPE shares were down around 5% in after-hours trading at the time of writing. The after-hours decline suggests investors had concerns about HPE’s outlook despite the strong results. During the earnings call, management said operating margins are expected to decline sequentially, mainly due to a higher mix of AI systems and pricing. Management also said supply constraints continue to limit HPE’s ability to meet higher customer demand, adding that the company is working closely with partners to secure additional multi-year supply agreements. See what 10M+ investors are talking about. Get the Stocktwits Daily Rip for what retail is watching right now, free to your inbox HPE reported fiscal third-quarter adjusted earnings per share (EPS) of $1.11, which was above analyst estimates of $0.92, according to Fiscal.ai. Revenue rose 34% year over year to $12.2 billion, beating consensus estimates of $11.99 billion. For the fourth quarter, HPE expects EPS of $1.20 to $1.30, above the $1.07 consensus estimate. The company expects Q4 revenue of $13.9 billion to $14.8 billion, also ahead of the $13.04 billion consensus estimate. HPE raised its fiscal 2026 EPS outlook to $3.75 to $3.85 from its previous range of $3.35 to $3.45. The new range is also above the $3.45 consensus estimate, according to Fiscal.ai. The company raised its fiscal 2026 revenue growth outlook to 34% to 37%, compared with its previous forecast of 29% to 33%. HPE also raised its revenue growth expectations for its Networking segment to 73% to 74%. HPE expects free cash flow of at least $3.75 billion for fiscal 2026. The company also raised its fiscal 2027 outlook. HPE now expects EPS growth of 16% to 20%, compared with its previous view of 12% to 16%. HPE raised its fiscal 2027 revenue growth framework to 13%-17% and now expects free cash flow of at least $5 billion. HPE announced an expanded collaboration with Oracle (ORCL) to help scale Oracle’s global AI infrastructure by deploying HPE Juniper Networking across Oracle’s AI data centers. The expanded collaboration builds on more than a decade of engineering work between Oracle and Juniper Networks and includes networking support services and financing capabilities. HPE Juniper Networking routing and switching platforms currently support key parts of Oracle Cloud Infrastructure’s data center and edge networks. As Oracle expands its AI superclusters, those networks will face greater demands on bandwidth, latency, congestion management and fault recovery. As part of the agreement, HPE has issued Oracle warrants to purchase shares of HPE common stock. On Stocktwits, retail sentiment for HPE jumped to ‘extremely bullish’ from ‘bullish’ over the past 24 hours, while message volume was ‘high’ at the time of writing. Despite the strong results, a Stocktwits retail trader questioned the decline in HPE shares, asking, “What else is market looking for?” Another trader took a more optimistic view, saying HPE’s earnings beat and raised guidance should eventually support the stock, even if shares were not reacting positively immediately. A third trader was even more bullish, pointing to the company’s higher guidance for both 2026 and 2027. The trader said the outlook made HPE a “no brainer” and indicated they were adding to their position. HPE stock has gained 114% year-to-date. Also See: AVAV Stock In Focus As AeroVironment Wins $465M Army Laser Weapons Contract For updates and corrections, email newsroom[at]stocktwits[dot]com. Aveek Bhowmik has no position in any of the stocks mentioned in this article. StockTwits' news team content is for informational purposes only and is not intended as investment advice. For more, see our editorial policy. This article was originally published on StockTwits. Related: Why Did PCG, NIO, XPEV Stocks Drop To 52-Week Lows Today? Why Did PCG, NIO, XPEV Stocks Drop To 52-Week Lows Today? RKLB Stock Snaps 3-Day Slide: Investors Shrug Off CFO’s $8.8M Sale As Rocket Lab Scores 94th Launch Win