Hewlett-Packard Enterprise (HPE) shares soar on strong third-quarter results and surging AI demand

Key Highlights

Artificial intelligence infrastructure brings unprecedented order activity

Profit prospects and future expectations

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• Revenue in the third quarter of 2026 reached US$12.2 billion, a year-on-year increase of 34%, exceeding Wall Street forecasts
• Adjusted earnings per share of US$1.11. exceeded analyst expectations by more than 18%, marking the first time that non-GAAP earnings per share exceeded $1.00.
• The company generated free cash flow of $958 million, setting a record high in the third quarter.
• The AI systems division achieved $1.6 billion in revenue and new orders reached $2.4 billion. Backlog orders hit record high
• Management raised its fiscal 2026 revenue growth forecast to 34%-37% from the previous 29%-33%

Stock price performance

In the trading after the release of earnings on September 5, 2026, HP Enterprises (Hewlett Packard Enterprise) shares rose about 5% to $54.44 before falling back and finally closing around $52.09. Since the beginning of 2026, the stock has returned approximately 114%.

Overview of Financial Results

Hewlett-Packard Enterprises Corporation (HPE)'s total revenue in the third quarter was US$12.2 billion, a significant increase of 34% from US$9.1 billion in the same period last year, exceeding the market consensus forecast of approximately US$11.99 billion. Adjusted earnings per share were $1.11, above expectations of $0.93, or an increase of about 18%.

The company's free cash flow surged to $958 million during the quarter, setting its strongest third-quarter performance in HPE's history. Non-GAAP operating profit margin expanded to 16.2%, almost double the 8.5% in the same period last year.

HPE has raised its fiscal 2026 revenue growth forecast to 34%-37%, following a previous forecast of 29%-33%. The company also released revenue guidance for the fourth quarter of 2026, ranging from $13.9 billion to $14.8 billion, significantly higher than analysts 'expectations of $13.02 billion. The median full-year adjusted earnings per share guidance was raised to $3.80, an increase of approximately 12%.

AI Infrastructure: Unprecedented order vitality

The AI Systems division's quarterly revenue was approximately US$1.6 billion, and with new orders of US$2.4 billion, the backlog of orders reached the highest level in the company's history. Network solutions designed specifically for AI applications received US$700 million in orders in the third quarter, with year-to-date bookings totaling US$2.2 billion.

The GreenLake platform customer base increased by 18% year-on-year to 52,000 users. Private cloud AI orders achieved triple-digit percentage growth.

CEO Antonio Neri described artificial intelligence as a "growth driver for many years," emphasizing that corporate customers are moving from experimental pilots to comprehensive production deployments. A notable achievement this quarter was the deepening of the partnership with Oracle, where HPE Juniper network solutions will become the foundation for one of the industry's most ambitious AI cloud infrastructure projects.

Continuing supply chain challenges, especially shortages in high-bandwidth memory and DDR5 components, continue to constrain the speed at which orders are converted into revenue recognition. Management said these bottlenecks are expected to persist into next year.

Earnings Outlook and Future Expectations

Despite the impressive quarterly performance, HPE shares fell about 5% during the extended trading hours following the announcement. Investors 'focus is on management's comments that gross margins may return to historical averages as the AI systems business, which accounts for an expanding proportion of revenue, increases.

The non-GAAP operating margin of 16.2% achieved in the third quarter was due to a combination of favorable conditions that executives acknowledge may not be sustainable in future quarters.

Looking forward to fiscal year 2027, HPE's proposed revenue growth framework is 13%-17%, which is slower than the expected growth trajectory of 34%-37% in 2026.

The company's board of directors announced a quarterly cash dividend of US$0.1425 per share, which will be paid on October 16, 2026 to registered shareholders as of September 17, 2026.

During the entire trading session on September 5, HPE shares fluctuated between $51.49 and $54.64, and finally closed at $52.09 on the New York Stock Exchange.