Hewlett Packard Enterprise, HPEDriven by demand for AI servers and network equipment, the company posted its highest-ever revenue in the third quarter of fiscal year 2026. With the effects of the Juniper Networks acquisition and data center investments both factored in, the company raised its outlook for the current and next fiscal years.
Total revenue for the third quarter was $12.2 billionThis represents an increase of about 34% compared to the same period last year. Revenue in the Cloud & AI segment was $9 billion, The networking segment posted revenue of $2.9 billion.
The $9 billion figure here refers not to annual revenue but to the fiscal year 2026 Segment Revenue for the Third QuarterOh, right. The company has revised upward its full-year revenue growth rate for FY2026 and its growth outlook for FY2027, so we need to keep those two separate.
| Quarterly revenue hits a record high of $12.2 billion
HPE's third-quarter revenue was $12.2 billionThis represents a 34% increase from the previous year. The GAAP operating margin was 11.4%, and the non-GAAP operating margin was 16.2%.
Diluted earnings per share were $1.06 on a GAAP basis and $1.11 on a non-GAAP basis. This result exceeded the range the company had previously provided.
Operating cash flow was $1.6 billion, and free cash flow was $1 billion. It is also noteworthy that the increase in sales went beyond a simple rise in order volume and led to actual improvements in profitability and cash flow.
| Cloud & AI Revenue: $9 billion
Revenue from the Cloud & AI segment was $9 billionThis represents a 25.4% increase from the previous year. Within this segment, server revenue rose 35.3% to $6.8 billion, while storage revenue increased 10.2% to $1.3 billion.
Demand for servers needed for AI model training and inference drove growth across the entire sector. This is due to the fact that as companies and cloud service providers build large-scale AI infrastructure, there is a growing need for high-performance servers, storage devices, and operational services.
The Cloud & AI segment's operating profit margin rose significantly to 17.0% from 7.0% the previous year. While product mix and supply conditions may vary, so a single quarter’s figures cannot be taken as indicative of a long-term trend, the improvement in profitability is clear.
| Networking revenue also increased by nearly 75%
Revenue in the networking segment was $2.9 billionThis represents a 74.9% increase from the previous year. Campus & Branch recorded $1.4 billion, Data Center Networking recorded $382 million, Security recorded $281 million, and Routing recorded $788 million.
In particular, data center networking grew by 112.2%, and routing grew by 270%. While caution is needed when making a direct comparison with the previous year—given that the figures include the effects of the Juniper Networks acquisition—this trend demonstrates that AI data centers are driving demand not only for servers but also for high-speed networking equipment.
HPE views AI networks as a growth area. This is because a network that minimizes latency and efficiently manages traffic is essential for numerous accelerators and servers to exchange data simultaneously.
| FY2026 Growth Forecast Raised to 34–37%
HPE has revised its revenue growth forecast for fiscal year 2026 from the previous range of 29–33% to 34~37%I raised it to . The growth forecast for the networking sector has also been raised to 73–74 percent.
The company revised its FY2026 non-GAAP diluted earnings per share forecast to $3.75–$3.85 and expects free cash flow of at least $3.75 billion.
The revenue growth forecast for fiscal year 2027 has been revised from the previous range of 8–12% to 13~17%I raised it to . The company projected a 16–20% growth rate in non-GAAP earnings per share and free cash flow of at least $5 billion.
| Expanding Collaboration with Oracle AI Data Centers
HPE is part of Oracle's AI data center Juniper Networking We've expanded our cooperation on deploying equipment. As AI accelerator clusters grow larger, the throughput and stability of the network handling communication between servers determine overall performance.
According to Reuters, HPE also issued warrants to Oracle that allow it to purchase HPE common stock. This can be seen as a move to strengthen their long-term infrastructure partnership beyond the supply of equipment.
However, the specific scale of equipment supply and the schedule for revenue recognition may vary depending on the progress of the contract. We need to distinguish between partnership announcements and their actual contribution to quarterly revenue.
| A situation where supply falls short of demand
Despite strong financial results, component supply remains the biggest constraint. HPE explained that demand significantly outstrips supply for components such as memory, NAND, CPUs, and storage devices.
If component prices rise or supply schedules are delayed, both revenue recognition and profitability could be affected. AI servers require multiple high-performance components simultaneously, so a shortage of even one type can delay the shipment of the entire system.
Although the company is working to secure long-term supply, it is unlikely that supply constraints will end anytime soon. The high order backlog represents future revenue opportunities, but it also creates operational pressure to deliver on time.
| The scope of AI infrastructure is expanding
These results show that investment in AI infrastructure is not concentrated on just one type of accelerator. Servers, storage, data center switches, routing, and security are all being integrated into a single system.
By acquiring Juniper, HPE has strengthened its position to supply both servers and networks. Its partnership with Oracle is an example of how this integration strategy is being applied in actual large data centers.
Going forward, we need to examine organic growth rates (excluding the effects of acquisitions), actual shipment volumes amid supply constraints, and whether the Cloud & AI segment can maintain its profitability. The upward revision reflects strong demand, but the results will depend on the supply of parts and the pace at which major contracts are executed.
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#HPE #HewlettPackardEnterprise #AI Server #CloudAndAI #JuniperNetworks #Data Center #Network Equipment #Oracle #AI Infrastructure #Earnings Release #Cloud #Semiconductor Infrastructure
