Hewlett Packard Enterprise Co. shares jumped dramatically in after-hours trading, rising +36.6% to $64.20 following the release of a fiscal second-quarter report that exceeded analyst expectations across multiple metrics.
The company reported adjusted earnings per share of $0.79 versus a consensus of $0.53 - its largest EPS beat since February 2018 - and revenue of $10.68 billion, a 40% increase year-over-year. HPE said its Cloud & AI revenue reached $7.71 billion, topping the $6.87 billion analysts had projected. The server division generated $5.45 billion in revenue, well above the $4.66 billion forecast by the Street.
CEO Antonio Neri characterized the quarter in blunt terms: "HPE delivered an exceptional quarter with record-breaking revenue, higher-than-anticipated profitability, and increased free cash flow, reflecting strong execution and healthy demand across the business."
Following the results, HPE raised its full-year non-GAAP EPS guidance by a full dollar to a range of $3.35 to $3.45, and said it is tracking two years ahead of its own long-term financial plan. For the company’s fiscal third quarter of FY26, management provided revenue guidance of $11.5 billion to $12.1 billion and non-GAAP EPS guidance of $0.88 to $0.93 - both figures above prior Street expectations.
Management described materially stronger demand for traditional servers. Neri noted that traditional server bookings rose by triple digits and that the company is carrying the largest backlog it has ever recorded. CFO Marie Myers attributed a key change in customer behavior this quarter to "significant enterprise adoption of agentic AI as a core workload."
Separately, during the regular trading session HPE debuted the ProLiant Compute DL394 Gen12 server at COMPUTEX. The new system, powered by the NVIDIA Vera CPU, is positioned for agentic AI workloads, reinforcement learning and complex data processing - a product addition that HPE presented as a commercial catalyst to complement the quarterly results.
A string of analyst firms had recently increased price targets on HPE. Multiple banks - including Morgan Stanley, Citigroup, Bernstein and Evercore ISI - raised targets in the weeks before the report, citing higher demand for traditional servers driven by AI workloads and HPE’s placement within AI infrastructure and networking.
Competitive dynamics in the AI server market also played into investor enthusiasm. Dell Technologies had reported an outsized quarter days earlier, driven by a 757% year-over-year increase in AI-optimized server revenue, which had already energized the market for AI-focused infrastructure and set the stage for HPE’s results.
On insider activity, HPE disclosed 22 open-market transactions by insiders over the past six months, all of which were sales; no insider purchases were reported in that period.
The broader equity market offered only modest support for the move: the S&P 500 rose by +0.3%, the Dow Jones Industrial Average increased +0.1%, and the NASDAQ added +0.4% on the day.
HPE said its stronger-than-expected quarter and the demand surge tied to AI data center expansion drove its decision to accelerate long-term financial targets by two years. Management and market observers viewed the combination of a substantial earnings beat, sharply raised guidance, a newly announced AI server, and a sector already primed by Dell’s strong performance as a cluster of positive catalysts that pushed HPE shares well beyond the prior 52-week high of $47.97.
Summary
Hewlett Packard Enterprise delivered a record-shattering Q2 with a major EPS beat, 40% revenue growth, and cloud-and-AI-driven sales that outpaced estimates. Management raised full-year guidance and outlined Q3 targets above Wall Street expectations, while unveiling a new ProLiant server designed for agentic AI workloads. The results and product announcement, together with recent analyst upward revisions and a strong performance from a major competitor, produced a sharp after-hours stock surge.
Key points
- HPE reported adjusted EPS of $0.79 versus a $0.53 consensus and revenue of $10.68 billion, +40% year-over-year.
- Cloud & AI revenue was $7.71 billion; the server division delivered $5.45 billion, topping analyst estimates.
- Company raised full-year EPS guidance to $3.35–$3.45, said it is two years ahead of its long-term plan, and provided Q3 FY26 revenue and EPS guidance above Street expectations.
Risks and uncertainties
- Insider activity: 22 open-market insider transactions in the past six months were all sales; no insider purchases were recorded, which may prompt investor questions about insider sentiment.
- Competitive dynamics: The AI server market is highly competitive - recent outsized results from a rival (Dell Technologies) have already reshaped investor expectations and could affect future comparisons and investor sentiment.
- Demand concentration: The company’s upside was tied to rapid enterprise adoption of agentic AI workloads; if enterprise adoption patterns change, the associated demand for servers and networking products could be affected.
Market impact
HPE’s results, upgraded guidance and product launch reinforced investor interest in AI infrastructure suppliers and helped propel the stock far above its prior 52-week high. The report further underscores the interconnection between AI workload adoption, server demand and networking equipment sales across the enterprise hardware sector.