Hewlett Packard Enterprise Shares Decline Following Subdued 2026 Revenue Guidance

Hewlett Packard Enterprise Provides Cautious 2026 Outlook Amidst Strategic Pivot

Hewlett Packard Enterprise (HPE) (NYSE: HPE) shares experienced a notable decline in after-hours trading on October 15, 2025, following its Securities Analyst Meeting, where the company's fiscal year 2026 financial guidance fell short of Wall Street expectations. This market reaction occurred despite HPE's announcement of a 10% increase in its annual dividend and a substantial boost to its share repurchase program.

Disparity in Fiscal Year 2026 Projections and Market Reaction

During its Securities Analyst Meeting 2025, held in San Jose, California, HPE detailed its strategic priorities and financial outlook through fiscal year 2028. For fiscal year 2026, HPE projected year-over-year revenue growth between 5% to 10% on a pro forma basis. This forecast stood in stark contrast to analyst consensus estimates, which had anticipated revenue growth closer to 17%. Similarly, the company's adjusted earnings per share (EPS) forecast for FY26 was set between $2.20 and $2.40, falling below the anticipated $2.41.

Immediately following these announcements, HPE's stock price reacted negatively, with reports indicating drops ranging from 5.7% to 10% in after-hours and early post-market trading. This downturn highlighted investor skepticism regarding the company's near-term growth trajectory, overriding the positive signals sent by its capital return initiatives.

Strategic Investments and Shareholder Returns

Despite the subdued revenue guidance, HPE underscored its commitment to shareholder value. The company announced a 10% increase to its annual dividend for fiscal year 2026, reflecting confidence in its underlying financial health and future cash flow generation. Furthermore, HPE's Board of Directors authorized an additional $3 billion for share repurchases, bringing the total authorization to approximately $3.7 billion. These actions signal a strategic financial framework focused on returning capital to shareholders through consistent dividend growth and buybacks.

HPE's long-term financial model, spanning fiscal years 2025 through 2028, projects a compounded revenue growth rate of 5% to 7% and non-GAAP operating profit growth of 11% to 17%. By fiscal year 2028, the company anticipates non-GAAP diluted net EPS of at least $3.00 and expects to generate more than $3.5 billion in free cash flow. These projections are supported by cost-saving initiatives, including the Catalyst program, aiming for at least $350 million in gross savings by FY28, and an expected $600 million in synergies from the Juniper Networks acquisition.

Broader Industry Context and AI Ambitions

HPE's strategic pivot centers on strengthening its leadership position in the high-growth, high-margin networking market, particularly following the Juniper Networks acquisition. This acquisition, valued at $14 billion, is expected to significantly enhance HPE's networking capabilities and competitive standing against rivals such as Cisco Systems.

A cornerstone of HPE's strategy is to profitably capture growth in the burgeoning Artificial Intelligence (AI) infrastructure market, with a specific focus on enterprise and sovereign customer segments. Antonio Neri, president and CEO of HPE, emphasized this shift:

"By aligning our investments and innovation to address the IT industry's most promising opportunities in networking, cloud, and AI, we're poised to gain share in the markets that matter most to our customers."

However, the market's cautious reaction to the FY26 guidance suggests a broader "reality check" for the enterprise tech sector. Investors appear to be seeking more concrete evidence of rapid capitalization on the AI boom, rather than solely strategic announcements. Some analysts have expressed skepticism regarding HPE's ability to execute its AI-driven growth strategies effectively, citing competitive pressures from hyperscalers like Amazon Web Services (AWS) and Microsoft Azure. The divergence between HPE's projections and market expectations underscores the demand for tangible accelerated returns in a competitive and rapidly evolving technology landscape.

Outlook and Key Factors for Investors

Looking ahead, HPE's performance will largely depend on its ability to execute its strategic vision, particularly in integrating Juniper Networks and scaling its AI infrastructure offerings. Investors will be closely monitoring the translation of strategic investments into accelerated revenue growth and improved profitability. The coming quarters will provide crucial insights into whether HPE can successfully navigate competitive pressures and capitalize on the long-term opportunities presented by networking and AI. Upcoming economic reports and further details on the company's progress in its high-growth segments will be key factors to watch.