Hewlett Packard Enterprise Raises 2027 Outlook as AI Networking Demand Surges

Hewlett Packard Enterprise NYSE: HPE Chief Strategy Officer Shannon Cross said the company is seeing strong demand across networking, storage and traditional servers, while supply availability and order conversion remain key priorities as it targets growth in fiscal 2027. Speaking at the Goldman Sachs Communacopia + Technology Conference, Cross highlighted HPE's most recent quarterly performance, including $1.11 in earnings per share, nearly $1 billion in free cash flow and what she described as the company's first quarter with more than $1 in earnings per share. She said the company also raised its free-cash-flow target to at least $3.75 billion for fiscal 2026 and at least $5 billion for the following year. Goldman Sachs analyst Kat Murphy noted that HPE had raised its fiscal 2026 and fiscal 2027 outlook, with fiscal 2027 guidance calling for 13% to 17% revenue growth and 16% to 20% EPS growth. Cross said the company is focused on translating its expanding order backlog into revenue. Cross said networking revenue increased 10% in the latest quarter, while orders rose 36%. Storage revenue also grew 10%, with order growth running at roughly twice that rate, she said. Traditional server orders increased 75% year over year. HPE's confidence in its outlook partly reflects larger multiyear supply agreements for components in tight supply, Cross said. She noted that disclosed purchase commitments rose from $6 billion to $30 billion, with networking commitments doubling sequentially and the remaining increase tied to cloud and AI-related components. “Demand is absolutely not a problem,” Cross said. “It’s basically being able to deliver the customers.” HPE has raised its fiscal 2026 target for Networks for AI orders to between $2.5 billion and $3 billion, compared with an earlier target of $1.5 billion. Cross pointed to demand across routing and switching products, including the PTX router, MX router and QFX platform. She said the company sees particular opportunity in routing infrastructure used to connect AI data centers. Cross also cited HPE's direct liquid-cooled QFX switch, which she said is a 100% direct liquid-cooled Tomahawk 6 top-of-rack switch and reached the market at least six months ahead of competing products. Cross discussed HPE's previously announced Oracle AI data-center opportunity, describing it as a competitive win involving PTX, MX and QFX products. She said Oracle was attracted by the liquid-cooled switch, HPE's broader scale and its financial-services and leasing capabilities. The deal serves as a proof point that HPE can compete in AI data-center networking, Cross said, adding that the company is speaking with other market participants about similar opportunities. HPE expects its combination with Juniper Networks to expand the addressable market for networking products in enterprise and hyperscale accounts.