Hewlett-Packard Enterprise just posted its strongest quarterly results in almost eight years. On Monday, shares jumped 30% after the company reported second-quarter numbers that beat analyst expectations in every major area and raised its full-year earnings outlook by a dollar. Here’s what fueled the strong results and why HPE’s AI server business is growing faster than the company expected.
Adjusted earnings per share were 79 cents, far above the 53-cent average estimate and the company’s biggest earnings surprise since February 2018. Revenue grew 40% from last year to $10.68 billion, beating the $9.79 billion forecast. Server revenue, part of the Cloud and AI division, was $5.45 billion, ahead of the $4.66 billion estimate. Total Cloud and AI revenue reached $7.71 billion, topping the $6.87 billion prediction.
The company increased its full-year 2026 earnings guidance to $3.35 to $3.45 per share, up from the previous range of $2.30 to $2.50. HPE says it is now about two years ahead of its long-term financial plan. CEO Antonio Neri said traditional server bookings have more than doubled, and the company now has its largest order backlog ever.
HPE’s focus on on-premises AI infrastructure for national labs, businesses, and security-focused industries is creating higher-margin opportunities compared to the neocloud market that competitors like Dell target. However, higher memory costs are still a short-term risk, and Neri expects these pressures to last into 2027.
Alongside its earnings report, HPE announced at the Computex conference in Taiwan a new 12th-generation ProLiant server powered by Nvidia’s Vera CPUs, which is now in full production. The New York Stock Exchange is one of the first customers and plans to use the new system to process over one trillion messages each day. The server will be available this fall.
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