HPE surges 30% after Q2 earnings beat by nearly $1B on AI demand

Hewlett Packard Enterprise reported Q2 revenue of $10.68B, beating consensus by $910M, as AI infrastructure demand surged.

"We are operating roughly two years ahead of the financial targets we laid out for FY2028," Chief Executive Officer Antonio Neri said.

Revenue grew 40% from a year earlier, while adjusted earnings per share more than doubled. Cloud & AI revenue climbed 23% year over year to $7.7B, with server revenue up 33% as customers invested heavily in AI compute infrastructure. Networking revenue surged 148% year over year, driven by the Juniper acquisition, with routing revenue jumping to $775M from $1M a year earlier.

Shares rose as much as 30% in after-hours trading, the biggest single-session gain since at least 2018. The company now expects full-year adjusted EPS of $2.30 to $2.50, up from its prior range, with free cash flow of at least $2B. Management said it achieved record gross margins and its highest second-quarter free cash flow ever.

The Juniper acquisition, which closed earlier this year, is already contributing meaningfully. Networking revenue now accounts for a growing share of total sales, and management said integration cost synergies are arriving ahead of schedule. The company entered the quarter with a record $5B AI Systems backlog, with the pipeline running at multiples of that figure.

The guidance raise signals management expects AI infrastructure demand to sustain its current trajectory. Investors will watch the next earnings call for updates on segment margins and the pace of AI order conversion.

This article is for informational purposes only and does not constitute investment advice.